Private ruling: Section 128F - public offer test and withholding tax
Date of advice: 4 August 2022
Published: November 2022
Ruling period: Year ending DDMMYYYY to year ending DDMMYYYY
Date scheme commenced: DDMMYYYY

Ruling: Q1: Will the Syndicated Facility Agreement (as defined below) constitute a 'syndicated loan facility' as defined in subsection 128F(9) of the Income Tax Assessment Act 1936 (ITAA 1936)? | A1: Yes. | Q2: Will each of the loans made pursuant to the Syndicated Facility Agreement constitute a 'syndicated loan' as defined in subsection 128F(9) of the ITAA 1936? | A2: Yes. | Q3: Does the invitation to become a lender under the Syndicated Facility Agreement satisfy the 'public offer test' in subsection 128F(3A) of the ITAA 1936? | A3: Yes. | Q4: Will subsection 128F(2) of the ITAA 1936 apply such that interest paid by AusCo on each syndicated loan issued under the Syndicated Facility Agreement will not be subject to tax imposed under Division 11A of Part III of the ITAA 1936? | A4: Yes. | Q5: Will AusCo have an obligation to withhold an amount from any interest paid under the Syndicated Facility Agreement under section 12-245 of Schedule 1 to the TAA 1953? | A5: No.

Relevant facts and circumstances: AusCo 1. AusCo is a company incorporated in Australia. It is an Australian resident for Australian taxation purposes. 2. AusCo is a wholly owned subsidiary of Foreign Company 1 (FC1). FC1 is itself a subsidiary of Foreign Company 2 (FC2). 3. FC2 is listed on the Foreign County stock exchange and is widely held. None of FC2's largest shareholders have been invited to participate in the syndicated facility agreement (the Syndicated Facility AgreementorSFA). 4. FC1 is headquartered in Foreign Country and is involved in a particular industry. 5. FC2 is an ultimate holding company of the Foreign Company Group (FCG). The FCGs businesses are involved in a wide variety of industries. The Project - Ownership Structure 6. AusCo is a minority participant in an unincorporated joint venture (the JV). The JV is undertaking the Project. 7. The JV consists of three other participants unrelated to AusCo. Syndicated Debt Facility 8. Between YYYY and MMYYYY, AusCo has invested over US$XXX,XXX,XXX in the Project. FC1 is committed to invest a further US$X,XXX,XXX,XXX to complete the Project. The other JV participants will commit an additional US$X,XXX,XXX,XXX. 9. AusCo intends to finance up to XX% of its costs in relation to the development, construction, completion and commissioning of the Project via entry into a syndicated facility agreement (the Syndicated Facility AgreementorSFA). 10. Under the SFA, a loan facility of up to US$X,XXX,XXX,XXX will be made available by lenders to AusCo. Invitation 11. An expression of interest was sent to XX potential lenders by AusCo via email on or around DDMMYYYY. An additional X potential lenders were invited in MMYYYY and MMYYYY following reverse enquiries. 12. The email invited the potential lenders to provide senior debt financing of approximately US$X,XXX,XXX,XXX under a SFA to fund the Project. 13. AusCo made informational documents and a summary of terms of the SFA available to the invitees. 14. Three of the invitees had common majority shareholders. 15. The financial institutions interested in participating in the SFA were required to submit their committed bid in writing to AusCo. 16. At the time the invitations to become a lender under the SFA were made: a. AusCo was of the belief that each invitee carried on the business of providing finance, or investing or dealing in securities, in the course of operating in financial markets. b. there were at least 10 invitees that AusCo neither knew nor suspected were associates (within the meaning of section 128F(9) of the ITAA 1936) of each other. c. AusCo neither knew, nor had reasonable grounds to suspect, that an associate (within the meaning of section 128F(9) of the ITAA 1936) of AusCo will become a lender under the SFA. SFA 17. The key terms of the SFA are as follows: a. The term of the SFA is XX years after Financial Close for Uncovered Sub-Facilities and XX years after Financial Close for Covered Sub-Facilities. b. The Facility comprises four Sub-Facilities. c. The SFA states that "this [SFA] is a syndicated facility agreement within the meaning of section 128F of the Australian Tax Act". d. The Parties of the SFA agree: i. The obligations of a Finance Party under the Finance Documents are several; ii. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other person under the Finance Documents; iii. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents; iv. The rights of a Finance Party under the Finance Documents are separate and independent rights; and v. A Finance Party may, except as specifically provided for in the Finance Documents, separately enforce its rights under or in connection with the Finance Documents. e. AusCo will repay each Sub-Facility in accordance with the relevant repayment schedule contained in the Sub-Facility Supplemental Terms for that Sub-Facility under the SFA. f. The first Interest Period with respect to each Loan shall be the period from the date of that Loan until the next Interest Payment Date. Subsequent Interest Periods shall end on each Interest Payment Date. g. AusCo as the Borrower undertakes, represents and warrants to the Finance Parties that it has made, before the date of the SFA, invitations to become a Lender under the SFA: i. to at least 10 parties each of whom, at the date the relevant invitation was made: (i) the officers and employees of the Borrower involved in the transaction on a day-to- day basis believed carried on the business of providing finance, or investing or dealing in securities, in the course of operating in financial markets for the purposes of subparagraph 128F(3A)(a)(i) of the Australian Tax Act; and (ii) was not known, or suspected, by the officers and employees of the Borrower involved in the transaction on a day-to-day basis to be an Associate of any of the other persons covered by the SFA; or ii. in an electronic form, or in another form that is used by financial markets for dealing in debentures (as defined in subsection 128F(9) of the Australian Tax Act) or debt interests (as defined in section 974-15 and 974-20 of the Australian Tax Act), and it was not known, or suspected, by the officers and employees of the Borrower involved in the transaction on a day-to-day basis that a company that is or will become a Lender under the Facility is an Offshore Associate of the Borrower h. The SFA states: i. each Original Lender represents and warrants to the Borrower that at the time it received the invitation of the SFA, it was carrying on a business of providing finance, or investing or dealing in securities, in the course of operating in financial markets, or the invitation it received to become a Lender was made publicly in electronic form or in another form that is used by financial markets for dealing in debentures or debt interests, and ii. Each Lender represents and warrants to the Borrower that no relevant officers or employees of it involved on a day-to-day basis with it becoming a Lender under the SFA were aware that the Lender was an Associate of any other person to whom an invitation to become a Lender under the SFA was made, or an Offshore Associate of the Borrower at the time it was invited to participate in the SFA. i. Under the SFA, each Lender, and, if applicable, each Arranger, will provide to the Borrower when reasonably requested by the Borrower any factual information in its possession or which it is reasonably able to provide (including, where applicable, confirmation that it is carrying on a business of providing finance, or investing or dealing in securities, in the course of operating in financial markets) to assist the Borrower to demonstrate (based upon tax advice received by the Borrower) that: i. the requirements of Section 128F of the Australian Tax Act have been satisfied in relation to the SFA; and ii. payments of interest under the Sub-Facilities in respect of which they are an Arranger or Lender are exempt from Australian Withholding Tax under that section of the Australian Tax Act, where to do so will not in the Lender's or Arranger's reasonable opinion breach any law or regulation or any duty of confidence. 18. Pursuant to the SFA, the following terms have been defined: a. " Associate " has the meaning given to such term in Section 128F(9) of the Australian Tax Act. b. " Lender " means: i. any Original Lender; and ii. any bank financial institution, trust, fund or other entity which has become Party as a "Lender" in accordance with the SFA which in each case has not ceased to be a Party as such in accordance with the terms of the SFA. c. " Offshore Associate " means an Associate of the Borrower: i. which is a non-resident of Australia and does not become a Lender, or receive a payment, in carrying on a business in Australia at or through a permanent establishment of the Associate in Australia; or ii. which is a resident of Australia and which becomes a Lender, or receives a payment, in carrying on a business in a country outside Australia at or through a permanent establishment of the Associate in that country; and which, in either case: i. does not become a Lender in the capacity of a clearing house, custodian, funds manager or responsible entity of a registered scheme; or ii. does not receive a payment in the capacity of a clearing house, paying agent, custodian, funds manager or responsible entity of a registered scheme. 19. Each of the loans made pursuant to the SFA will constitute a debt interest (pursuant to Subdivision 974-B of ITAA 1997). 20. Amounts classified as interest under the SFA will be in the nature of interest for Australian withholding tax purposes pursuant to section 128A of ITAA 1936. 21. Each Lender will severally, but not jointly, agree to lend funds to the Borrower, pursuant to the SFA. 22. The Borrower will have access to at least A$100,000,000 at the time the first loan is provided under the SFA. 23. All the Lenders party to the SFA have an address outside of Australia. 24. There are X number of Lenders participating in the SFA. There will be at least two lenders under the SFA at all relevant times.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 128F | Income Tax Assessment Act 1936 subsection 128F(1) | Income Tax Assessment Act 1936 subsection 128F(2) | Income Tax Assessment Act 1936 subsection 128F(3A) | Income Tax Assessment Act 1936 subsection 128F(5AA) | Income Tax Assessment Act 1936 subsection 128F(9) | Income Tax Assessment Act 1936 subsection 128F(11) | Income Tax Assessment Act 1936 subsection 128F(12) | Income Tax Assessment Act 1936 subsection 128F(13) | Income Tax Assessment Act 1936 section 318 | Taxation Administration Act 1953 Schedule 1 section 12-300 | Taxation Administration Act 1953 Schedule 1 paragraph 12-300(a) | Taxation Administration Act 1953 Schedule 1 section 12-245

Reasons for decision: Summary: The SFA constitutes a 'syndicated loan facility' as defined in subsection 128F(9) of the ITAA 1936. | Detailed Reasoning - Detailed reasoning: According to subsection 128F(9) of the ITAA 1936, the term 'syndicated loan facility' has the meaning given by subsections 128F(11), 128F(12) and 128F(13) of the ITAA 1936. In the present case, as the Syndicated Facility Agreement involves multiple lenders and a single borrower, subsection 128F(11) of the ITAA 1936 is the relevant provision. Subsection 128F(11) of the ITAA 1936 states: A written agreement is a syndicated loan facility if: a) the agreement describes itself as a syndicated loan facility or syndicated facility agreement; and b) the agreement is between one or more borrowers and at least 2 lenders; and c) under the agreement each lender severally, but not jointly, agrees to lend money to, or otherwise provide financial accommodation to, the borrower or borrowers; and d) the amount to which the borrower or borrowers will have access at the time the first loan or other form of financial accommodation is to be provided under the agreement is at least $100,000,000 (or a prescribed amount). Based on the information provided, the SFA constitutes a syndicated loan facility under subsection 128F(11) on the basis that: • it is a written agreement which describes itself as a syndicated facility agreement; • the agreement is between one borrower and at least two lenders; • each lender has severally, but not jointly, agreed to lend money to AusCo; and • AusCo will have access to at least AUD $100 million at the time the first loan is to be provided. Therefore, the SFA constitutes a 'syndicated loan facility' as defined in subsection 128F(9) of the ITAA 1936. | Detailed Reasoning - Question 2: Will each of the loans made pursuant to the SFA constitute a 'syndicated loan' as defined in subsection 128F(9) of the ITAA 1936? | Summary: Each of the loans made pursuant to the SFA will constitute a 'syndicated loan' as defined in subsection 128F(9) of the ITAA 1936. | Detailed Reasoning - Detailed reasoning: The term 'syndicated loan' is defined in subsection 128F(9) of the ITAA 1936 to mean: "syndicated loan" means a loan or other form of financial accommodation that is provided under a syndicated loan facility, being a facility that has 2 or more lenders. As discussed above, the SFA has two or more lenders and is a 'syndicated loan facility' for the purposes of subsection 128F(9) of the ITAA 1936. Therefore, each of the loans made pursuant to the SFA will constitute a 'syndicated loan' as defined in subsection 128F(9) of the ITAA 1936. | Detailed Reasoning - Question 3: Does the invitation to become a lender under the SFA satisfy the 'public offer test' in subsection 128F(3A) of the ITAA 1936? | Summary: The invitation to become a lender under the SFA will satisfy the public offer test in subsection 128F(3A) of the ITAA 1936. The invitation will not be taken to have never satisfied the public offer test under subsection 128F(5AA) of the ITAA 1936 as no associates of AusCo are participant lenders in the SFA. | Detailed Reasoning - Detailed reasoning: Subsection 128F(3A) of the ITAA 1936 prescribes three alternative public offer tests relevant to a syndicated loan facility, only one of which must be satisfied for a company to meet the public offer test requirement. Subsection 128F(3A) states: An invitation to become a lender under a syndicated loan facility by a company satisfies the public offer test if the invitation was made: (a) to at least 10 persons each of whom: (i) was carrying on a business of providing finance, or investing or dealing in securities, in the course of operating in financial markets; and (ii) was not known, or suspected, by the company to be an associate (see subsection (9)) of any of the other persons covered by this paragraph; or (b) publicly in electronic form, or in another form, that was used by financial markets for dealing in debentures or debt interests; or (c) to a dealer, manager or underwriter, in relation to the placement of debentures or debt interests, who, under an agreement with the company, made the invitation to become a lender under the facility within 30 days in a way covered by paragraph (a) or (b). In subsection 128F(5AA) of the ITAA 1936, it states the conditions where the public offer test is taken never to have been satisfied: An invitation to become a lender under a syndicated loan facility is taken never to have satisfied the public offer test if, at the time the invitation is made, the company knew, or had reasonable grounds to suspect, that: (a) an associate of the company is or will become a lender under the facility; and (b) either: (i) the associate is a non-resident and the associate is not or would not become a lender under the facility in carrying on a business in Australia at or through a permanent establishment of the associate in Australia; or (ii) the associate is a resident of Australia and the associate is or would become a lender under the facility in carrying on a business in a country outside Australia at or through a permanent establishment of the associate in that country; and (c) the associate is not or would not become a lender under the facility in the capacity of: (i) a dealer, manager or underwriter in relation to the invitation; or (ii) a clearing house, custodian, funds manager or responsible entity of a registered scheme. The wording used by subsection 128F(3A) of the ITAA 1936 uses the same wording as subsection 128F(3) of the ITAA 1936. As such, guidance relevant to subsection 128F(3) of the ITAA 1936 is useful in understanding subsection 128F(3A) of the ITAA 1936. Similarly, guidance provided in respect of subsection 128F(5) of the ITAA 1936 is useful in understanding subsection 128F(5AA) of the ITAA 1936. | Detailed Reasoning - Invitation: Taxation Determination TD 1999/24 Income tax: interest withholding tax exemption under section 128F of the Income Tax Assessment Act 1936 - how may a company satisfy the introductory requirements in paragraphs 128F(3)(a) and 128F(3)(b) that a debenture must be offered on a 'debenture by debenture' basis? (TD 1999/24) provides that for the purposes of section 128F of ITAA 1936, 'offer' is not limited to the context of a contractual offer but can be an invitation or inducement to potential investors to make offers. It is therefore not necessary to establish whether the public offer is accepted by all offerees, only that the offer was actually made to the requisite number of entities. AusCo's written invitation, consisting of the expression of interest and attached documentation that was sent electronically to potential lenders to become a lender under the SFA and for them to make their offers, constitutes an invitation to potential lenders for the purposes of the public offer test. | Detailed Reasoning - Paragraph 128F(3A)(a) of the ITAA 1936 - the first public offer test: Under the first public offer test, the relevant invitation must be made to at least 10 persons carrying on a business of providing finance that are not associates of one another. Taxation Determination TD 1999/13 Income tax: interest withholding tax exemption under section 128F of the Income Tax Assessment Act 1936 - for the purposes of the public offer test in paragraph 128F(3)(a) (the 'first public offer test'): (a) are pension funds and other 'qualified institutional buyers' considered to be carrying on the business of providing finance, or investing or dealing in securities? (b) what is required of a company to establish that the persons to whom the debentures are offered are carrying on business in the manner required by the legislation? (c) when is a company taken to know or suspect that such a person is an associate (TD 1999/13) provides that in relation to subparagraph 128F(3A)(a)(i) of the ITAA 1936, a company is able to rely on a representation by a person to whom the loan is offered that it is carrying on a business as required by the legislation. TD 1999/13 also states, with respect to subparagraph 128F(3A)(a)(ii) of the ITAA 1936, that the company must offer the loan to at least 10 persons each of whom was not known, or suspected by the company to be associates of one another. This tests the knowledge or suspicion of the company as to whether any entities to whom it made an offer are associates of one another. Knowledge in this sense requires actual knowledge, and suspicion needs to be looked at objectively. A company is not regarded as knowing or suspecting persons are associates unless it is established that officers of the company knew or had reasonably grounds to suspect otherwise. It is looked at objectively in the light of what is reasonable in the individual circumstances of a particular case. TD 1999/13 also states that a company offering loans is not required to undertake a detailed examination into the relationships between persons it offers debentures to, however it cannot ignore companies that are generally known to be associates. AusCo has provided a written invitation to significantly more than 10 potential lenders to become a lender under the SFA. The written invitation issued will therefore constitute an invitation to at least 10 persons for the purposes of section 128F(3A)(a)(i) of the ITAA 1936. The SFA lists the Lenders' representations, warranties and undertakings. It provides that the Lenders represent to AusCo that they were carrying on the business of providing finance, or investing or dealing in securities, in the course of operating in financial markets. AusCo is entitled to rely upon the Lenders' representation that they were carrying on the relevant business required by the legislation for the purposes of subsection 128F(3A) of the ITAA 1936. The SFA lists AusCo's representations and warranties in respect of the SFA. AusCo represents that it has invited at least 10 parties to become Lenders each of which carry on the business of providing finance, or investing or dealing in securities, in the course of operating in financial markets. AusCo also represents that it was not known, or suspected, by AusCo that any of the potential Lenders were associates of any of the other potential Lenders. Despite these representations, AusCo is aware that three of the financial institutions to whom the offer has been made are commonly owned, and as such are likely to be associates as defined in section 318 of the ITAA 1936. Notwithstanding this, there is however over ten persons to whom an offer is made that are not associates of one another. As such, based on the representations made in the SFA, and the diversity and number of financial institutions to whom the expression of interest email was sent, there is no evidence to contradict the SFA that the offer has been made to at least 10 un-associated financial institutions. This is sufficient to satisfy subparagraph 128F(3A)(a)(ii) of the ITAA 1936, which does not require a company offering loans to undertake a detailed examination of the relationships between the offerees. As such, it is accepted by the Commissioner that the invitation was made to at least 10 persons, of whom AusCo did not know or suspect are associates of one another. Based on the above, the invitation made by AusCo therefore satisfies the first public offer test in paragraph 128F(3A)(a) of the ITAA 1936 on the basis that: • a written invitation was sent via electronic correspondence to more than 10 financial institutions inviting them to become lenders under the SFA; • the invitation was made to at least 10 financial institutions which: ­ were carrying on a business of providing finance, or investing or dealing in securities, in the course of operating in financial markets at the time the invitation was made; and ­ were not known or suspected by AusCo to be associates of any other invitee at the time of making the invitation. | Detailed Reasoning - Subsection 128F(5AA) of the ITAA 1936: In addition to satisfying subsection 128F(3A) of the ITAA 1936, it is also necessary to consider subsection 128F(5AA) of the ITAA 1936, which specifies the conditions under which an invitation to become a lender under a syndicated loan facility is taken never to have satisfied the public offer test. Relevantly, the invitation is taken never to have satisfied the public offer test if, at the time the invitation is made, the company knew, or had reasonable grounds to suspect, that an associate of the company is or will become a lender under the facility. An exception to this test is if the relevant lender that is known or suspected of being an associate is lending through its Australian permanent establishment. Where this test is failed, the entire invitation fails the public offer test, and withholding tax becomes payable on the interest paid under the loans pursuant to the facility. Taxation Determination TD 2001/3 Income tax: Interest Withholding Tax Exemption - for the purposes of subsection 128F(5) of the Income Tax Assessment Act 1936, when will a company be taken to have the requisite knowledge or suspicion that the debenture or an interest in the debenture was being, or would later be, acquired by an associate (TD 2001/3) provides that knowledge in this sense refers to actual knowledge of the company at the time the loan was issued; suspicion is to be assessed objectively in light of what is reasonable in the individual circumstances of the particular case. TD 2001/3 further provides that a company will not be taken to have the requisite knowledge or suspicion if the company takes reasonable steps to ensure that its associates do not acquire its debentures. While every case is judged on its merits, reasonable steps may include writing to associates asking them not to acquire debentures, including statements or warranties in the prospectus warning of the risk associated with associates purchasing debentures regarding the public offer test, and instructions to the dealer. Finally, TD 2001/3 notes that a company cannot ignore persons it knows or has reasonable grounds to suspect are associates, and then use a defence that it relied on the bona fide representations of the relevant entity, dealer, manager or underwriter. AusCo is wholly owned by FC1 which is in turn owned by FC2. FC2 is widely held. Apart from two entities, all other participants in the SFA are widely held and have no obvious relationship with AusCo or its ultimate controlling entity FC2. There is no majority shareholding by the FC2 group of any of the Lenders, nor is there any majority shareholding by the lenders in FC2, or AusCo. Thus, it is highly unlikely that the lenders will be associates of AusCo. Additionally, AusCo has taken reasonable steps to ensure that none of the potential lenders are associates of AusCo. AusCo has engaged a tax advisor to provide advice on the associates test and have included warranties in the SFA which state that neither the Lenders or AusCo are aware nor had reasonable grounds to suspect that they are associates of each other. The Lenders and AusCo have both agreed to provide each other with these warranties in entering into the SFA, and AusCo have consistently throughout the process been clear with their intention for the invitation to participate in the SFA to satisfy the public offer test. As such, it can be concluded that AusCo satisfy the requirement in subsection 128F(5AA) of the ITAA 1936. | Detailed Reasoning - Conclusion: For the reasons noted above, the invitation to become a lender under the SFA will satisfy the public offer test in subsection 128F(3A) of the ITAA 1936. AusCo is not an associate of at least one of the financial institutions participating in the SFA, and did not know, or reasonably suspect, that it was an associate of any of the Lenders. | Detailed Reasoning - Question 4: Will subsection 128F(2) of the ITAA 1936 apply such that interest paid by AusCo on each syndicated loan issued under the SFA will not be subject to tax imposed under Division 11A of Part III of the ITAA 1936? | Summary: As the public offer test has been satisfied, subsection 128F(1) of the ITAA 1936 will apply. Interest paid by AusCo on each syndicated loan issued under the SFA will not be subject to tax imposed under Division 11A of Part III of the ITAA 1936. | Detailed Reasoning - Detailed reasoning: Subsection 128F(2) of the ITAA 1936 provides that tax is not payable under Division 11A in respect of interest to which section 128F of the ITAA 1936 applies. Subsection 128F(1) of the ITAA 1936 provides that section 128F applies to interest paid by a company in respect of a debenture or debt interest in the company if: (a) the company was a resident of Australia when it issued the debenture or debt interest; and (b) the company is a resident of Australia when the interest is paid; and (c) for a debt interest other than a debenture--the debt interest: (i) is a non-equity share; or (ii) consists of 2 or more related schemes (within the meaning of the Income Tax Assessment Act 1997 ) where one or more of them is a non-equity share; or (iii) is a syndicated loan; or (iv) is prescribed by the regulations for the purposes of this section; and (d) either: (i) the issue of the debenture or debt interest satisfies the public offer test set out in subsection (3) or (4); or (ii) for a syndicated loan--the invitation to become a lender under the relevant syndicated loan facility satisfies the public offer test set out in subsection (3A). The interest paid by AusCo under the SFA satisfies the conditions in subsection 128F(1) of the ITAA 1936 on the basis that: • AusCo was a resident of Australia when it issued the debt interest; • AusCo will be a resident of Australia when the interest is paid; • as discussed above, the SFA constitutes a 'syndicated loan facility' as defined in subsection 128F(9) of the ITAA 1936, such that the loans made pursuant to the SFA will constitute a 'syndicated loan' as defined in subsection 128F(9) of the ITAA 1936; and • the invitation to become a lender under the SFA satisfies the public offer test set out in subsection 128F(3A) of the ITAA 1936. Therefore, subsection 128F(1) of the ITAA 1936 will apply such that, under subsection 128F(2) of the ITAA 1936, interest paid by AusCo on each syndicated loan issued under the SFA will not be subject to tax imposed under Division 11A of Part III of the ITAA 1936. | Detailed Reasoning - Question 5: Will AusCo have an obligation to withhold an amount from any interest paid under the Syndicated Facility Agreement under section 12-245 of Schedule 1 to the TAA 1953? | Summary: AusCo will not have an obligation to withhold an amount from any interest paid under the SFA under section 12-245 of Schedule 1 to the TAA by virtue of paragraph 12-300(a) of Schedule 1 to the TAA. | Detailed Reasoning - Detailed reasoning: Section 12-245 of Schedule 1 to the TAA states an entity must withhold an amount from interest it pays to an entities or entities if the recipients of the interest has an address outside Australia or the payer of the interest is authorised to pay the interest at a place outside Australia. The Lenders AusCo has chosen to become a lender under the SFA have addresses which are outside Australia. As such section 12-245 of Schedule 1 to the TAA applies. However, section 12-245 of Schedule 1 to the TAA and the amounts required to be withheld are limited by section 12-300 of Schedule 1 to the TAA. Under paragraph 12-300(a) of Schedule 1 to the TAA, an entity is not required to withhold an amount from ( inter alia ) interest (within the meaning of Division 11A of Part III of the ITAA 1936) if no withholding tax is payable in respect of the interest. As discussed above, the interest payable by AusCo on each syndicated loan issued under the Syndicated Facility Agreement satisfies the requirements of subsection 128F(1) of the ITAA 1936 such that subsection 128F(2) of the ITAA 1936 applies. As such, withholding tax will not be payable in respect of the interest under subsection 128B(1) of the ITAA 1936. Accordingly, AusCo will not have an obligation to withhold an amount from any interest paid under the SFA in accordance with section 12-245 of Schedule 1 to the TAA as it is limited by paragraph 12-300(a) of Schedule 1 to the TAA.

Question 1: Will the SFA constitute a "syndicated loan facility" as defined in subsection 128F(9) of the ITAA 1936?