ATO ID 2003/443: Infrastructure Borrowings: Direct and indirect - infrastructure period - relevant event - first act or omission
Date of decision: 31 March 2003
Year of income: Year ended 30 June 2003
Business line: Public Groups and International

Issue
Is the 'relevant event' for the purposes of section 159GZZZZH of the Income Tax Assessment Act 1936 (ITAA 1936) in relation to a cancellation of the Indirect Infrastructure Borrowings (IIB) Certificate that is held by the taxpayer, the cancellation by the Development Allowance Authority (the DAA) of the Direct Infrastructure Borrowings (DIB) Certificate and is the amount of the 'Factor' in subsection 159GZZZZH(1) of the ITAA 1936 to be determined accordingly, with the 'Part of the Infrastructure Period after the Act or Omission' commencing from the date of the actual cancellation of the DIB Certificate?

Decision
No. The 'relevant event' for the purposes of section 159GZZZZH of the ITAA 1936 in relation to the cancellation of an IIB Certificate is the 'first act or omission' that was a ground relied upon by the DAA for cancelling the certificate and not the DAA's actual cancellation of the DIB Certificate. The 'Factor' in subsection 159GZZZZH(1) of the ITAA 1936 should therefore be calculated having regard to the timing of the occurrence of that act or omission and not the date of the cancellation of the DIB certificate.

Facts
The project company currently holds a certificate from the DAA permitting it to issue DIBs with which it financed construction of an infrastructure project. In turn, the taxpayer holds a corresponding certificate from the DAA permitting it to issue IIBs to fund the subscription for the DIBs issued by the project company.

Reasons for decision
Summary: The definition of 'Factor' in subsection 159GZZZZH(1) of the ITAA 1936 refers to 'the first act or omission that was the ground' for the cancellation. The DAA's actual cancellation of the DIB certificate is not the ' first act or omission' relied on as the ground for cancellation. The 'Factor' in subsection 159GZZZZH(1) of the ITAA 1936 should be calculated having regard to the year of income in which the 'first act or omission' occurred. Accordingly, 'the relevant event' for the purposes of section 159GZZZZH of the ITAA 1936, is the ground relied upon by the DAA that lead to the cancellation of the IIB certificate.

Legislative references: Income Tax Assessment Act 1936 subsection 159GZZZZH(1)
Subject references: Infrastructure borrowings