Private ruling: Reorganisation
Published: March 2013

Ruling: The ruling concerned the following: | 1. Will the issue of Mandatorily Redeemable Preference Shares (MRPS) by Company A to Company B constitute a scheme that gives rise to a debt interest in Company A under section 974-15 of the Income Tax Assessment Act 1997 (ITAA 1997)? | 2. Will the issue of the MRPS by Company A constitute an 'injection of capital' for the purposes of paragraph 707-325(4)(a) of the ITAA 1997? | Decision | The Commissioner ruled that: | 1. No. The issue of MRPS by Company A to Company B does not constitute a scheme that gives rise to a debt interest in Company A under section 974-15 of the ITAA 1997. | 2. No. The issue of the MRPS by Company A does not constitute an 'injection of capital' for the purposes of paragraph 707-325(4)(a) of the ITAA 1997.