Income Tax Assessment (1997 Act) Regulations 2021
This section applies to an obligation to pay the principal or interest on a relevant term subordinated note at a particular time on or after 1 July 2001.
974-135.03(2)
For the purposes of paragraphs 974-135(8)(a) and (b) of the Act, the fact that the obligation is subject to insolvency or capital adequacy conditions does not in itself prevent the obligation from being a non-contingent obligation.
Meaning of relevant
974-135.03(3)
A term subordinated note is relevant if: (a) at the time of the note ' s issue:
(i) the note does not constitute or meet the requirements of a Tier 1 capital instrument; and
(b) the note has a term of not more than 30 years; and (c) the note does not include an unconditional right to extend the term of the note beyond a total term of 30 years; and (d) the note is subject to a condition that any payment of the principal or interest beyond the date on which it would otherwise be payable must accumulate (with or without compounding); and (e) the note does not give the issuer of the note an unconditional right to decline to provide a financial benefit that is equal in nominal value to the issue price of the note to settle the obligations under the note.
(ii) the note does not form part of the Tier 1 capital of the issuer of the note, or a connected entity, and the reason for the note not doing so is not that the instrument is in excess of the Tier 1 capital required for the purposes of prudential standards that deal with capital adequacy; and
Meaning of insolvency or capital adequacy conditions
974-135.03(4)
Conditions applying to the obligation are insolvency or capital adequacy conditions if they have the effect that the issuer of the note is obliged or able to defer the payment of the principal or interest beyond the date on which it would otherwise be payable if, on that date: (a) the issuer of the note is insolvent, or would become insolvent if the payment were made; or (b) if the issuer of the note is an entity that is regulated by APRA or a comparable foreign regulator - the issuer is in breach of its capital adequacy ratio or would be in breach if the payment were made.
Obligations to pay before 15 April 2010
974-135.03(5)
If the obligation is an obligation to pay at a time before 15 April 2010, this section applies only to the extent that applying it would not have the result that: (a) the rights of a person (other than the Commonwealth or an authority of the Commonwealth) immediately before 15 April 2010 would be affected so as to disadvantage the person; or (b) liabilities would be imposed on a person (other than the Commonwealth or an authority of the Commonwealth), for anything done or omitted to be done before 15 April 2010.
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