ATO ID 2006/274: Division 974: Section 128F - meaning of 'debt interest'
Date of decision: 16 August 2006
Year of income: 30 June 2007
Business line: International Centre of Expertise

Issue
Does the term 'debt interest' in section 128F of the Income Tax Assessment Act 1936 (ITAA 1936) mean 'debt interest' as defined in Subdivision 974-B of Division 974 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision
Yes. The term 'debt interest' in section 128F of the ITAA 1936 means 'debt interest' as defined in Subdivision 974-B of Division 974 of the ITAA 1997.

Facts
An Australian resident company issues a debt interest to a non-resident investor.

Reasons for decision
Summary: Section 128F provides that Division 11A of the ITAA 1936 does not apply to interest paid on certain publicly offered company debentures or debt interests that satisfy all of the requirements set out in subsection 128F(1). The term 'debt interest' is not defined in section 128F of the ITAA 1936. However, subsection 6(1) of the ITAA 1936 states that 'debt interest' has the same meaning as in the ITAA 1997, and, subsection 995-1(1) of the ITAA 1997 defines 'debt interest' as having the meaning given by Subdivision 974-B of Division 974 of the ITAA 1997. Accordingly, the term 'debt interest' in section 128F of the ITAA 1936 means 'debt interest' as defined in Subdivision 974-B of Division 974 of the ITAA 1997.

Legislative references: Income Tax Assessment Act 1936 subsection 6(1) section 128F subsection 128F(1) subsection 128F(3)
Related ATO interpretative decisions: ATO ID 2006/272 | ATO ID 2006/273
Subject references: Debt interest International tax