Private ruling: Capital raising
Date of advice: 18 June 2018
Published: September 2018

Ruling: 1. Will each Note be treated as an equity interest (as defined in subsection 995-1(1) of the ITAA 1997) under section 974-70 of the ITAA 1997? | 2. Will the Distributions made on the Notes be frankable non-share dividends within the meaning of sections 202-30 and 202-40 of the ITAA 1997? | 3. Will a franking debit arise as a result of the application of the linked distribution provisions in section 204-15 of the ITAA 1997? | 4. Will the Commissioner make a determination under paragraph 204-30(3)(a) of the ITAA 1997 to give rise to a franking debit to the Issuer in relation to distributions made in respect of either the Notes or a previously issued equity instrument? | 5. Will the Commissioner make a determination under paragraph 177EA(5)(a) of the ITAA 1936 to give rise to a franking debit for the Issuer in relation to Distributions made in respect of the Notes? | 6. Will the Commissioner make a determination under subsection 45C(3) of the ITAA 1936 in relation to the transaction? | 7. Will the Notes be subject to the commercial debt forgiveness provisions in Division 245 of the ITAA 1997? | 8. Will an assessable profit or gain arise for the Issuer under sections 6-5 or 6-10 of the ITAA 1997 in relation to the issue of the Notes, the issue of ordinary shares on exchange of the Notes, or redemption of the Notes? | 9. Will the Issuer be required to recognise gains and losses under Division 230 of the ITAA 1997 in relation to the Notes? | 10. Will the share capital account of the Issuer become tainted within the meaning of Division 197 of the ITAA 1997 upon the issue of the Notes, by the issue of ordinary shares on exchange of the Notes, or on redemption of the Notes? | Decision | The Commissioner ruled that: | 1. Yes, each Note will be treated as an equity interest in the Issuer (as defined in subsection 995-1(1) of the ITAA 1997) under section 974-70 of the ITAA 1997. | 2. Yes, the Distributions made on the Notes will be frankable non-share dividends within the meaning of sections 202-30 and 202-40 of the ITAA 1997. | 3. No, a franking debit will not arise as a result of the application of the linked distribution provisions in section 204-15 of the ITAA 1997. | 4. No, the Commissioner will not make a determination under paragraph 204-30(3)(a) of the ITAA 1997 to give rise to a franking debit to the Issuer in relation to distributions made in respect of either the Notes or a previously issued equity instrument. | 5. No, the Commissioner will not make a determination under paragraph 177EA(5)(a) of the ITAA 1936 to give rise to a franking debit for the Issuer in relation to Distributions made in respect of the Notes. | 6. No, the Commissioner will not make a determination under subsection 45C(3) of the ITAA 1936 in relation to the transaction. | 7. No, the Notes will not be subject to the commercial debt forgiveness provisions in Division 245 of the ITAA 1997. | 8. No, an assessable profit or gain will not arise for the Issuer under either section 6-5 or 6-10 of the ITAA 1997 in relation to the issue of the Notes, the issue of ordinary shares on exchange of the Notes, or redemption of the Notes. | 9. No, the Issuer will not be required to recognise gains and losses under Division 230 of the ITAA 1997 in relation to the Notes. | 10. No, the share capital account of the Issuer will not become tainted within the meaning of Division 197 of the ITAA 1997 upon the issue of the Notes, by the issue of ordinary shares on exchange of the Notes, or on redemption of the Notes.