Private ruling: Bailment arrangement
Date of advice: 24 July 2019
Published: October 2019

Ruling: Q1: Is the Bailment Agreement between A and B a 'financing arrangement' pursuant to section 974-130 of the Income Tax Assessment Act 1997 (ITAA1997)? | A1: Yes. | Q2: If the Bailment Agreement is a 'financing arrangement', is it a 'debt interest' within the meaning of section 974-20 of the ITAA 1997? | A2: Yes. | Q3: Is the Bailment Agreement 'debt capital' pursuant to subsection 995-1(1) of the ITAA 1997? | A3: Yes. | Q4: If the Bailment Agreement is a 'debt interest' within the meaning of section 974-20 of the ITAA 1997, are the fees payable to B treated as 'debt deductions' within the meaning of section 820-40 of the ITAA 1997 and subject to the thin capitalisation provisions under Division 820 of the ITAA 1997? | A4: Yes.




Subject: Bailment arrangement: In order to protect the privacy and commercial in-confidence components of this private binding ruling the following summary is provided.