Private ruling: Issue Floating Rate Notes
Published: March 2012
Date scheme commenced: The Taxpayer is seeking to raise funds from the Australian retail market by issuing securities. The securities will be issued in accordance with specified Terms and Conditions. During the term of the securities, the Taxpayer will make interest payments quarterly in arrears. Upon maturity and/ or redemption of the securities, the principal amount of the securities will also be paid by the Taxpayer.

Ruling: Q1: Will the financial benefits be equity interests under section 974-70 of the ITAA 1997? | A1: No | Q2: Will the Notes constitute a financial arrangement pursuant to section 230-45 of the ITAA 1997? | A2: Yes | Q3: Will the loss from the financial arrangement constituting the Notes be deductible pursuant to subsection 230-15(2) of the ITAA 1997? | A3: Yes | Q4: Will the loss be treated on an accruals basis pursuant to subsection 230-100(2) of the ITAA 1997? | A4: Yes

Relevant facts and circumstances: The Taxpayer is seeking to raise funds from the Australian retail market by issuing securities. The securities will be issued in accordance with specified Terms and Conditions. During the term of the securities, the Taxpayer will make interest payments quarterly in arrears. Upon maturity and/ or redemption of the securities, the principal amount of the securities will also be paid by the Taxpayer.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 974 | Income Tax Assessment Act 1997 Division 230

Reasons for decision: Summary: Will the financial benefits be equity interests under section 974-70 of the ITAA 1997? As the taxpayer has not satisfied all of the requirements of section 974-70 of the ITAA 1997, the arrangement will not be treated as "equity interests" under section 974-70 of the ITAA 1997 Will the arrangement constitute a financial arrangement pursuant to section 230-45 of the ITAA 1997? As the taxpayer's arrangement satisfies all of the requirements of section 230-45 of the ITAA 1997, it will constitute a financial arrangement under this provision. Will the loss from the financial arrangement be deductible pursuant to subsection 230-15(2) of the ITAA 1997? As the taxpayer has satisfied all of the requirements of subsection 230-15(2) of the ITAA 1997, it will be entitled to claim losses from the financial arrangement under this provision. Will the loss be treated on an accruals basis pursuant to subsection 230-100(2) of the ITAA 1997? As the gains/ losses of the taxpayer have met all of the requirements of subsection 230-100(2) of the ITAA 1997, the taxpayer will be entitled to treat such gains/ losses in respect of the financial arrangement on an accruals basis.

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