Private ruling: Contribution and non-arm's length income involving limited recourse borrowing arrangement
Published: May 2014
Ruling period: Income year ended 30 June 2014
Date scheme commenced: The scheme has commenced

Ruling: Q1: 1. If the trustee of a superannuation fund (the Fund) enters into a limited recourse borrowing arrangement (LRBA) and borrows at 0% interest rate, will the discounted amount of interest (i.e. the difference between interest calculated using an arm's length interest rate and a 0% interest rate) be considered to be a superannuation contribution received by the Fund? 2. Will any income that may be derived by the Fund from its beneficial ownership of an asset it acquired (the Asset) be non arm's length income of the Fund if the Asset was acquired by the Fund partially with a loan (the Loan) obtained under the LRBA? | A1: 1. No. 2. Yes .

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. The Fund is a complying superannuation fund and has two members, Member A and Member B. The trustee of the Fund is a corporate trustee (the Trustee). Member A and Member B are the directors of the Trustee. Members A and B are each other's spouse. The trust deed of the Fund empowers the Trustee to invest in certain assets and to borrow money to finance such investments. Taxpayer C is Member A's parent and is therefore a Part 8 associate of Member A and a related party of the Fund for the purposes of the Superannuation Industry (Supervision) Act 1993 . Taxpayer C is very advanced in age and owns the Asset, which is subject to a mortgage as Taxpayer C had borrowed an amount from a financial institution to fund the purchase of the Asset many years ago. The Asset was used by a related party for certain activities. There was no formal lease agreement and no payments were made. However, the entity using the Asset paid all outgoings in respect of the Asset. In 2013 an independent valuer (the Valuer) provided a market value for the Asset and the annual income the Asset might generate. By a transfer form executed in 2013 Taxpayer C transferred the Asset to Member A. On the transfer form an amount representing the Asset's market value was inserted as the consideration. According to the tax agent (the Tax Agent) who lodged this 'private ruling application', the Asset was gifted to Member A, and the amount of consideration inserted was for the purpose of applying for stamp-duty exemption. Shortly afterwards Member A as the seller and the Trustee as the buyer entered into a 'Contract for sale of the Asset' (the Contract). Pursuant to the Contract, the Trustee acquired the Asset at its market value on behalf of the Fund. As at this writing, the Asset has not yet been settled and is still encumbered to the financial institution from which Taxpayer C has borrowed. To fund part of the cost of acquiring the Asset, the Trustee entered into an LRBA with Taxpayer C (the Lender) under which the Lender provides a cash loan to the Trustee. The LRBA was formalised by a loan agreement (Loan Agreement) that was executed by the parties on the same day as the transfer form in respect of the Asset was executed. It is stated in the Loan Agreement that: (a) The Lender will lend monies to the Borrower for the purpose of acquiring a Single Acquirable Asset including any incidental costs. (b) The Single Acquirable Asset will be held by the Holding Trustee under the terms and conditions of the Holding Trust Deed including that the Borrower has an absolute beneficial entitlement to the Assets notwithstanding the legal title to the Single Acquirable Asset is held by the Holding Trustee. (c) The loan of monies from the Lender to the Borrower is according to the terms and conditions of the Loan Agreement as set out in the Schedule to the Loan Agreement. (d) The loan is non-recourse with the Lender having recourse only against the Single Acquirable Asset held in the Holding Trust. The Schedule to the Loan Agreement has specified the following details: (a) the loan amount; (b) the term of the loan; (c) the interest rate is 0% fixed rate; (d) repayments are in respect of the Principal only; and (e) the commencement date. Under the Loan Agreement, the Lender and the Borrower may, by mutual agreement, extend the term of the loan by mutual agreement as long as the extension is permitted under the Superannuation Laws and does not result in a new loan. Under the Loan Agreement, any repayment may be by way of an Asset, as a set off or as a forgiveness of the Loan by the Lender. Each year the Trustee will repay a certain amount. When the Lender dies, the Trustee will continue to make annual repayments of the same amount to the deceased person's estate. The Fund's 2013 financial statements show that certain repayments were made in respect of the loan. Those repayments consisted of both a physical payment and a debt forgiveness of a certain amount. The amount forgiven was treated by the Fund as a contribution to the Fund. In the event of a debt forgiveness, the Lender will not pursue the debt forgiven. Any such forgiveness will be confirmed in writing by both parties. A second mortgage over the Asset will be lodged on behalf of the Lender. To fund the remaining part of the cost of acquiring the Asset, the Trustee has obtained a letter of offer (the Offer) from a financial institution. The following were specified in the Offer: _ the borrower (being the Trustee on behalf of the Fund); _ the loan facility and limit; _ the loan purpose; _ the security trustee holding the Asset's legal title (being the Custodian mentioned later in this legal reasoning document); _ the loan period; _ the loan conditions and pricing; _ the interest rate; _ the margin over the interest rate; _ the interest payment dates. As security for the loan, the Offer requires a first mortgage on the Asset to be registered in favour of the financial institution Under the Offer, the financial institution must be satisfied that the deed establishing the Fund allows the Trustee to borrow in accordance with section 67A of the Superannuation Industry (Supervision) Act 1993 . The financial institution must also be satisfied with the terms of the deed of declaration of trust entered into by the borrower and the security trustee. A covenant attached to the Offer notes that the loan facility is a limited recourse facility so that: _ the right of the financial institution to recover the loan limit, interest, fees and any other amounts owed under the facility is limited to the Asset and any security provided by a guarantor or other third part; and _ the financial institution has no recourse to any of the Fund's other assets to enforce any rights it has under the facility. The Trustee will pay interest on the loan account with the financial institution directly to the latter. To date, a limited recourse borrowing agreement between the financial institution and the Trustee as per the Offer has not yet been executed. Neither has the financial institution registered a mortgage in respect of the Asset. According to the Tax Agent, the financial institution will do so when the Asset is settled. A 'Declaration of Custody Trust' (the Holding Trust Deed) for the Fund was executed by the Trustee and a corporate trustee (the Custodian) on the same day as the transfer form in respect of the Asset was executed. The Holding Trust Deed and the schedules attached to it provide among other things, that: _ the legal title of the Asset must be held by a third party on behalf of the Trustee; _ the lender's rights against the Trustee for any default under the borrowing arrangement must relate only to the Asset for which the Trustee will purchase with the money it borrows; _ the Custodian agrees to act as the third party and to hold the title of the Asset ; _ the Custodian declares that it will hold the benefit of the custody fund on trust for the Trust; _ the Custodian agrees that it will maintain the legal title to the Asset until the Trustee directs otherwise but in such an event the Custodian must notify the lender first; _ the Trustee must designate one or more bank accounts of the Fund into which amounts may be deposited; _ the Custodian agrees to deposit, or arrange for the deposit of, any interest, income or other proceeds that the Asset generates and any accretion or accruals attributable to the Asset into the cash account or as otherwise directed by the Trustee; _ at all times up to and including the vesting date, the Trustee has a vested and indefeasible interest in, and is absolutely entitled to, the Asset and any other assets complying the custody fund; _ before the vesting date, the Trustee must ensure that all money the lender loaned to the Trustee in respect of the Asset has been repaid and that any security or charge over the Asset has been discharged in full; and _ the lenders are the financial institution and Taxpayer C; Members A and B are the directors and shareholders of the Custodian. The Asset is leased to a related party (the Lessee) for an agreed amount to the Fund directly. The lease is yet to be executed. The agreed amount is payable directly to the Fund each month and will be adjusted annually in accordance with the consumer price index plus an agreed margin. Member A is the director and a shareholder of the Lessee. Member B is the other shareholder of the Lessee. According to its statement of financial position as at 30 June 20XX, the Fund's 'Net Asset Available to Pay Benefits' was an amount that is less than 10% of the aggregate amount of the loan provided by Taxpayer C and that to be provided by the financial institution.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 295-160 | Income Tax Assessment Act 1997 Section 295-545 | Income Tax Assessment Act 1997 Subsection 295-545(2) | Income Tax Assessment Act 1997 Section 295-550 | Income Tax Assessment Act 1997 Subsection 295-550(5) | Income Tax Assessment Act 1997 Subsection 995-1(1) | Income Tax Assessment Act 1936 Subsection 273(7) (repealed) | Superannuation Industry (Supervision) Act 1993 Subsection 66(5) | Superannuation Industry (Supervision) Act 1993 Section 67A | Superannuation Industry (Supervision) Act 1993 Subsection 67A(1) | Superannuation Industry (Supervision) Act 1993 Subsection 67A(2) Reasons for decision | Summary | The discounted amount of interest will not be considered to be a superannuation contribution to the Fund. | The income to be derived by the Fund from its beneficial ownership of the Property will be non-arm's length income of the Fund. | Detailed reasoning | Whether the discounted amount of interest is a superannuation contribution? | The Commissioner has set out his view of the meaning of contribution as it is used in relation to superannuation funds in Taxation Ruling TR 2010/1 titled Income tax: superannuation contributions . At paragraph 4 the Commissioner states: | In the superannuation context, a contribution is anything of value that increases the capital of a superannuation fund provided by a person whose purpose is to benefit one or more particular members of the fund or all of the members in general. | Whether or not the capital of the Fund will be increased as a result of the Fund not being required to pay interest on the money borrowed under the Loan Agreement will, therefore, need to be determined. | The Commissioner discusses his view of the ordinary meaning of 'borrow' and 'loan' in Self Managed Superannuation Funds Ruling SMSFR 2009/2 titled Self managed superannuation funds: the meaning of 'borrow money' or 'maintain an existing borrowing of money' for the purposes of section 67 of the Superannuation industry (Supervision) Act 1993 (the SIS Act) . At paragraph 48 of that ruling the Commissioner recognises that while the obligation to pay interest may evidence the existence of a borrowing or loan of money it is not a necessary feature. The fact that there is no obligation on the part of the Fund to pay interest on the loan under the Loan Agreement does not result in an increase in the assets of the Fund. Therefore the discounted amount of interest (i.e. the difference between the interest calculated using an arm's length interest rate and that using a 0% interest rate) is not considered to be a superannuation contribution received by the Fund. | Consequently, the purpose of the Lender in offering a 0% interest rate loan to the Trustee does not fall for consideration if there is no increase in the capital of the Fund. The Commissioner is therefore of the view that the discounted amount of interest will not be a superannuation contribution to the Fund. | Whether income derived from 0% interest rate LRBA is non-arm's length income pursuant to section 295-550 of the ITAA 1997? | Section 295-545 of the Income Tax Assessment Act 1997 (the ITAA 1997) provides that the taxable income of a complying superannuation fund is split into a non-arm's length component and a low tax rate component. The note to subsection 295-545(1) of the ITAA 1997 explains that a concessional rate of tax applies to the low tax component, while the non-arm's length component is taxed at the highest marginal rate. These rates are set out in the Income Tax Rates Act 1986 . | Subsection 295-545(2) of the ITAA 1997 provides that the non-arm's length component for an income year is the entity's non-arm's length income for that year less any deductions to the extent that they are attributable to that income. | Pursuant to subsection 295-550(4) of the ITAA 1997, income derived by a beneficiary of a trust, other than because of holding a fixed entitlement to the income, is non-arm's length income of the entity. Where income is derived through holding a fixed entitlement, subsection 295 550(5) provides that: | Other income derived by the entity as a beneficiary of a trust through holding a fixed entitlement to the income of the trust is non-arm's length income of the entity if: | (a) the entity acquired the entitlement under a scheme, or the income was derived under a scheme, the parties to which were not dealing with each other at arm's length; and | (b) the amount of the income is more than the amount that the entity might have been expected to derive if those parties had been dealing with each other at arm's length. | Fixed entitlement to trust income. | The Custodian (the trustee of the Holding Trust) is the legal owner of the Asset. Accordingly the income derived from the Asset is trust income of the Holding Trust. | Under the Holding Trust Deed the Custodian is to deposit, or arrange for the deposit of, any interest, income or other proceeds that the Asset generates into the cash account or as otherwise directed by the Trustee. The Commissioner has been advised that the agreed amount payable by the Tenant is payable directly to the Fund. | As the Holding Trust Deed states that the Trustee has a vested and indefeasible interest in, and is absolutely entitled to, the Asset and any other assets comprising the Custody Fund as against the Custodian, this would indicate that the Trustee is the only beneficiary of the Holding Trust. | As the income derived from the Asset is trust income of the Holding Trust and as the Trustee is absolutely entitled to the trust income as the sole beneficiary of the Holding Trust, the Trustee holds, on behalf of the Fund, a fixed entitlement to 100% of the income of the Holding Trust for the purposes of subsection 295-550(5) of the ITAA 1997. | If this is not the intention of the parties to the Holding Trust Deed, then any income derived by the Fund as a beneficiary of the Holding Trust will by itself be non-arm's length income of the Fund pursuant to subsection 295-550(4) of the ITAA 1997. | Provided that the Holding Trust will distribute 100% of its net income to the Fund and to no other beneficiaries, the Commissioner considers that, for the purposes of this private ruling, the Trustee as the sole beneficiary of the Holding Trust holds a fixed entitlement to the income of the Holding Trust on behalf of the Fund. | Scheme | The term 'scheme' is defined in subsection 995-1(1) of the ITAA 1997 to mean: | (a) any arrangement; or | (b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise. | The term 'arrangement' is also defined in subsection 995-1(1) of the ITAA 1997 to mean: | any arrangement, agreement, understanding, promise or undertaking, whether expressed or implied, and whether or not enforceable (or intended to be enforceable) by legal proceedings. | The Full Federal Court in Allen v. Federal Commissioner of Taxation ( Allen ) considered the term 'arrangement' as defined for the purposes of former subsection 273(7) of the Income Tax Assessment Act 1936 (the ITAA 1936) - the immediate predecessor of subsection 295-550(5) of the ITAA 1997. As the definitions quoted above show, a 'scheme' includes any 'arrangement', and an 'arrangement' includes any 'agreement, understanding, promise or undertaking'. The Full Federal Court in Allen held that the series of steps undertaken by the parties that resulted in the acquisition of a fixed interest in the trust estate and the relevant distribution of income from that trust estate were readily seen to be an 'arrangement' to which the various entities were parties, and those results were readily seen to be the consequence of that arrangement. | Similarly, for the purposes of applying subsection 295-550(5) of the ITAA 1997 to the present case, the scheme involves the series of steps undertaken by the parties that results in the Fund's acquisition of its fixed entitlement to the income of the Holding Trust and any derivation of income by the Fund through holding that entitlement. These steps include: | (a) the gifting by Taxpayer C of the Asset to Member A even though Taxpayer C bought the Asset with a loan from a financial institution, and the loan is yet to be fully paid out; | (b) the establishment and operation of the Loan Agreement between the Trustee and Taxpayer C; and | (c) the establishment and operation of the Holding Trust for the benefit of the Fund in respective of the Asset, which was acquired partly with the money borrowed from Taxpayer C. | Similarly further, those results are readily seen to be the consequence of the scheme. As such, it is readily concluded that, for the purposes of paragraph 295-550(5)(a) of the ITAA 1997, the Fund would acquire its fixed entitlement to the income of the Trust under a scheme and any income derived through holding that entitlement would be derived under the scheme. | Not dealing at arm's length | Subsection 995-1(1) of the ITAA 1997 provides that in determining whether parties deal at arm's length, consider any connection between them and any other relevant circumstances. | The expression 'not dealing with each other at arm's length' or similar expressions have been considered by the court in numerous cases. In Federal Commissioner of Taxation v. AXA Asia Pacific Holdings Ltd ( AXA ) Justice Dowsett of the Full Federal Court summarised propositions from those cases. In his judgment Justice Dowsett stated that: | I have no real difficulty with any of the propositions which emerge from those cases. They may be summarised as follows: | _ in determining whether parties have dealt with each other at arm's length in a particular transaction, one may have regard to the relationship between them; | _ one must also examine the circumstances of the transaction and the context in which it occurred; | _ one should do so with a view to determining whether or not the parties have conducted the transaction in a way which one would expect of parties dealing at arm's length in such a transaction; | _ relevant factors which may emerge include existing mutual duties, liabilities, obligations, cross-ownership of assets, or identity of interests which might enable either party to influence or control the other, or induce either party to serve a common interest and so modify the terms on which strangers would deal; | _ where the parties are not in an arm's length relationship, one may infer that they did not deal with each other at arm's length, and that the resultant transaction is not at arm's length; | _ however related parties may, in some circumstances, so conduct a dealing as to displace any inference based on the relationship; | _ unrelated parties may, on occasions, deal with each other in such a way that the resultant transaction may not properly be considered to be at arm's length | In AXA Justices Edmonds and Gordon further stated that: | Any assessment of whether parties were dealing at arm's length involves 'an assessment [of] whether in respect of that dealing they dealt with each other as arm's length parties would normally do, so that the outcome of their dealing is a matter of real bargaining': … | With regard to the relationship between the parties: | _ Taxpayer C, who gifted the Asset to Member A, is the parent of Member A. | _ Under the Contract (for the sale of the Asset), Member A is the seller, and the Trustee is the buyer. | _ Under the Loan Agreement Taxpayer C is the Lender and the Trustee is the Borrower. | _ Members A and B, being each other's spouse, are the directors of the Trustee and the members of the Fund. | _ Members A and B are the directors and shareholders of the Custodian, which holds the Asset on trust. | _ Member A is the director and a shareholder, and Member B is the other shareholder, of the Lessee that leases the Asset from the Custodian. | From the above relationships it is clear that the parties in this case are not in an arm's length relationship. | Further, the Full Federal Court in Allen held that former paragraph 273(7)(a) of the ITAA 1936 - the immediate predecessor of paragraph 295-550(5)(a) of the ITAA 1997 - does not require that the 'dealing' consist only of the actual derivation of the income in question by 'the entity', but that the evident legislative intention of the provisions is to permit regard to be had to the totality of the steps that result in the entity's acquisition of its fixed entitlement to the income of the trust and any derivation of income by the entity through holding that entitlement. | In this case, that means that regard may be had to: | (a) the gifting of the Asset by Taxpayer C (the Lender) to Member A; and | (b) the establishment and operation of both: | (i) the Loan Agreement between the Trustee and the Lender; and | (ii) the Holding Trust for the benefit of the Fund. | Assessing the circumstances holistically, it is clear that the parties will not be dealing with each other in respect of the Loan Agreement as arm's length parties would do. Aspects which, taken together, the Commissioner considers leads to that conclusion include the following: | (a) Taxpayer C as the Lender is not, either by way of charging interest on the loan or by any other means, compensated for the opportunity cost in lending the principal or for the additional risk assumed in relation to recovery of the principal in the event of the Fund defaulting in re-paying the loan, given the limited recourse nature of the loan. | (b) Under the Offer, the financial institution agreed to lend an amount to the Trustee on condition that: | (i) interest will be charged at the current prime floating rate plus an agreed margin, | (ii) there will be a periodic loan pricing review; and | (iii) interest will be payable half-yearly. | (c) The Loan Agreement expressly provides for repayment by way of forgiveness of the loan. As stated in the Fund's financial statements for the 2012-13 income year, the loan was reduced by an amount which, according to the Tax Agent, was a debt forgiveness. | (d) There is no such provision as debt forgiveness in the Offer from the financial institution. Obviously a commercial lender as the financial institution would not lightly give away their right of recovery. Instead, they would preserve such a right throughout the loan term and would, in the event of default, exhaust all possible avenues for the recovery of any amount still outstanding before they may ultimately agree, on commercial grounds, to any debt forgiveness. | Amount of income greater than might be expected if dealing at arm's length | The final requirement of subsection 295-550(5) of the ITAA 1997, which is set out in paragraph 295-550(5)(b), is that the amount of the income (derived by the entity as a beneficiary of a trust through holding a fixed entitlement to the income of the trust) is more than the amount that the entity might have been expected to derive if the parties had been dealing with each other at arm's length. | If the parties in this case were dealing with each other at arm's length, the amount of the income that the Fund might have been expected to derive through the Holding Trust would, in the Commissioner's view, either be 'nil' or be less than under the proposed arrangement on the following bases: | (a) The Commissioner has noted that the Fund's 'Net Assets Available to Pay Benefits' as at 30 June 20XX was less than 10% of the total amount of the loans. Without being lent an amount by Taxpayer C on the proposed terms and without borrowing the same amount from any other sources at a commercial rate of interest, the Trustee would simply not be able, or would otherwise not be prepared, to proceed with purchasing the Asset. | In light of this, the amount of the income that the Fund might have been expected to derive through the Holding Trust would therefore be 'nil'. | (b) If the Trustee merely borrowed an amount from the financial institution at arm's length, the latter would charge a commercial rate of interest. This in turn would reduce the net income otherwise available to the Holding Trust for distributing to the Fund as the Holding Trust would, in such a case, be paying interest to the financial institution out of the rent it receives before it makes a distribution of its net income to the Fund. | This outcome will be the same even if an arrangement is put in place for the Fund to receive the agreed amount direct from the Lessee and to pay interest direct to the financial institution since what the Fund receives is, as noted before, a distribution of net income from the Holding Trust. | (c) Without being lent an amount by Taxpayer C on the proposed terms, the alternative for the Trustee would be to purchase an asset valued at no more than what the Fund could reasonably afford out of its own resources plus borrowing from the financial institution and/or any other commercial lender. In such a case it can reasonably be expected that the Holding Trust would have a smaller net income because: | (i) the alternative asset so purchased would generate a smaller lease income as the utility value of an asset to a prospective lessee would depend on its capabilities which are normally reflected by its market value; and/or | (ii) the Holding Trust would have to pay interest at market rate to the commercial lender(s). | (d) If, instead of Taxpayer C: | (i) gifting the Asset to Member A to enable the latter to on-sell the asset to the Fund; and | (ii) lending an amount to the Fund interest free in relation to the purchase of the Asset; | the Trustee used the Fund's own resources to acquire a smaller percentage (depending on the Fund's investment strategy) of Taxpayer C's interest in the Asset. As an arm's length dealing, Taxpayer C would then share a pro rata portion of the lease income from the Asset with the Fund accordingly. This would proportionately reduce the amount of the lease income that the Fund could otherwise receive under the proposed arrangement. Taxpayer C would then include their share of the lease income in their own assessable income. | As the amount of the income that Fund will receive is more than what the Fund might have been expected to receive under an arm's length dealing, paragraph 295-550(5)(b) of the ITAA 1997 is satisfied. | Consequently, the Commissioner considers that the income to be derived by the Fund through the proposed arrangement will be non-arm's length income of the Fund under subsection 295-550(5) of the ITAA 1997. | Other relevant comments | Legislative intent | This conclusion is entirely consistent with the legislative intent of section 295-550 of the ITAA 1997 and its predecessors. | The earliest predecessor of section 295-550 of the ITAA 1997 - former section 23F of the ITAA 1936 - was introduced in 1964 as a result of the Report of the Commonwealth Committee on Taxation, 1961 (the Ligertwood Report) which recommended legislative amendments to counter the numerous ways identified by the Committee in which a taxpayer could constitute a superannuation fund with income, that would have accrued to the taxpayer in the ordinary course of events, and thus be received virtually tax free. | Of particular relevance to the circumstances of this case was the second example given in the Ligertwood Report of a situation which the recommended legislation was to address: | A director-controlled superannuation fund is set up by a private company, primarily for the benefit of those employees who are also shareholders and directors. The directors then cause the company to make interest-free loans to the fund which invests the proceeds. The income derived by the fund from its investments is exempt under Section 23(j) and when this income is eventually paid to the directors in a lump sum on their retirement, only 5 per cent thereof will be taxed in the hands of the beneficiaries or alternatively the amount may be wholly free from tax. | Further, the Full Federal Court in Darrelen Pty Ltd v Federal Commissioner of Taxation stated that the policy underlying former section 273 of the ITAA 1936, and its predecessors, is to enable the Commissioner to deny the concessional taxation of income which has been diverted from taxpayers not enjoying that status. | Similarly, the Explanatory Memorandum to the Superannuation Legislation Amendment Bill (No.2) 1999 which inserted former subsections 273(6) and (7) of the ITAA 1936 - the immediate predecessors of subsections 295-550(4) and (5) of the ITAA 1997 - explained at paragraph 2.13 that: | Section 273 is designed to prevent income from being unduly diverted into superannuation entities as a means of sheltering that income from the normal rates of tax applying to other entities, particularly the marginal rates applying to individual taxpayers. | The main effect of the scheme in this case, being the movement of income producing capital through a non-arm's length dealing from entities who would pay marginal or company tax rates on such income into the concessionally taxed superannuation fund is clearly intended to be addressed by section 295-550 of the ITAA 1997 and its predecessors. | Regulatory issues | This private ruling is in relation to the income tax consequence of the proposed arrangement only. It does not address whether the Property satisfies the definition of 'business real property' under subsection 66(5) of the SIS Act or any other regulatory issues for the purposes of the SIS Act.