New Business Tax System (Debt and Equity) Act 2001 (163 of 2001)

Schedule 1   Debt and equity interests

Part 2   Amendment of the Income Tax Assessment Act 1936

Income Tax Assessment Act 1936

112   Section 398A

Repeal the section, substitute:

398A Application of Division 3A of Part III

(1) Subject to subsection (2), Division 3A of Part III applies in calculating the attributable income of the eligible CFC.

(2) Section 82R does not apply, subject to subsection (3), to outgoings during the eligible period under a convertible note if:

(a) the note was issued by the eligible CFC (whether or not the company concerned was a CFC at the time):

(i) before 1 July 1990; or

(ii) on or after 1 July 1990 and before 1 July 1992, where:

(A) the terms of the issue of the note were publicly announced by the eligible CFC before 1 July 1990; or

(B) the eligible CFC was, under a contract entered into before 1 July 1990, obliged to issue the note; and

(b) at the end of each statutory accounting period of the eligible CFC preceding the eligible period and ending after 30 June 1990, the eligible taxpayer was an attributable taxpayer in relation to the eligible CFC; and

(c) the eligible period begins before 1 July 2000.

(3) If:

(a) the terms of a note to which subsection (2) would, apart from this subsection, apply are varied (otherwise than because of a compromise or arrangement approved by a court); and

(b) the Commissioner considers that the variation is substantial enough to represent a new loan;

subsection (2) does not apply to outgoings under the note after the time at which the variation takes place.