Private ruling: Subvention Payments - Commissions and Establishment Fees
Date of advice: 16 October 2015
Published: November 2015

Ruling: Q1: Does X satisfy the definition of a 'financial arrangement' under section 230-45 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes | Q2: Does the exception in subsection 230-460(2) of the ITAA 1997 apply in respect of X? | A2: No | Q3: Is Payment A a 'financial benefit' A Co has a right to receive under X pursuant to subsection 230-60(2) of the ITAA 1997? | A3: Yes | Q4: Is Payment B a 'financial benefit' A Co has an obligation to provide under X pursuant to subsection 230-60(1) of the ITAA 1997? | A4: Yes | Q5: Is Payment C 'financial benefit' A Co has a right to recevie under X pursuant to subsection 230-60(2) of the ITAA 1997? | A5: Yes

Relevant facts and circumstances: A Co provides solutions to support the purchasing of X-Brand products in Australia. B Co is the Australian entity responsible for the sales of X-Brand products in Australia. A Co provides a range of packages. A Co is an Australian tax resident entity which is not a member of a tax consolidated group. A Co has not made any elections in respect of the TOFA provisions. Payment B are costs A Co incurred in carrying on a business for the purposes of gaining or producing assessable income, and not a loss or outgoing of a private or domestic nature or incurred in relation to A Co's gaining or producing non-assessable non-exempt income. Payments A, B and C are a financial benefit under section 974-160 of the ITAA 1997.

Relevant legislative provisions: Division 230 of the ITAA 1997

Reasons for decision: Detailed Reasoning - Detailed reasoning: X has met all of the relevant requirements of a financial arrangement under section 230-45 of the ITAA 1997. | Detailed Reasoning - Question 2: Does the exception in subsection 230-460(2) of the ITAA 1997 apply in respect of X? | Detailed Reasoning - Detailed reasoning: As the rights and/or obligations arising under X do not meet any of the circumstances in subsection 230-460(2) of the ITAA 1997, the exceptions in subsection 230-460(2) of the ITAA 1997 does not apply in respect of X. | Detailed Reasoning - Question 3: Is Payment A a 'financial benefit' A Co has a right to receive under X pursuant to subsection 230-60(2) of the ITAA 1997? | Detailed Reasoning - Detailed reasoning: As Payment A has met all of the relevant requirements of subsection 230-60(2) of the ITAA 1997, it is considered to be a financial benefit A Co has a right to receive under X pursuant to subsection 230-60(2) of the ITAA 1997. | Detailed Reasoning - Question 4: Is Payment B a 'financial benefit' A Co has an obligation to provide under X pursuant to subsection 230-60(1) of the ITAA 1997? | Detailed Reasoning - Detailed reasoning: As Payment B has met all of the relevant requirements of subsection 230-60(1) of the ITAA 1997, it is considered to be a financial benefit A Co has an obligation to provide under X pursuant to subsection 230-60(1) of the ITAA 1997. | Detailed Reasoning - Question 5: Is Payment C a 'financial benefit' A Co has a right to receive under X pursuant to subsection 230-60(2) of the ITAA 1997? | Detailed Reasoning - Detailed reasoning: As Payment C has met all of the relevant requirements of subsection 230-60(2) of the ITAA 1997, it is considered to be a financial benefit A Co has a right to receive under X pursuant to subsection 230-60(2) of the ITAA 1997.