Private ruling: Capital raising
Date of advice: 13 November 2020
Published: January 2021

Ruling: Q5: Will the Commissioner make a determination under paragraph 177EA(5)(a) of the ITAA 1936 that a specified franking debit arise in the franking account of Company X in respect of franked dividends paid on each Instrument? Answer: No

Relevant facts and circumstances: Company X applied for a private binding ruling in respect of the issuing of an Instrument for the purpose of raising capital.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1) | Income Tax Assessment Act 1936 section 121AB | Income Tax Assessment Act 1936 section 177A | Income Tax Assessment Act 1936 section 177D | Income Tax Assessment Act 1936 section 177EA | Income Tax Assessment Act 1997 section 202-5 | Income Tax Assessment Act 1997 section 202-40 | Income Tax Assessment Act 1997 section 202-45 | Income Tax Assessment Act 1997 section 204-30 | Income Tax Assessment Act 1997 section 207-20 | Income Tax Assessment Act 1997 section 207-145 | Income Tax Assessment Act 1997 section 713-505 | Income Tax Assessment Act 1997 section 974-20 | Income Tax Assessment Act 1997 section 974-75 | Income Tax Assessment Act 1997 section 960-120 | Income Tax Assessment Act 1997 section 995-1(1)


Question 1: Will the issue of an Instrument in Company X be an equity interest for the purposes of Division 974 of the Income Tax Assessment Act 1997 (ITAA 1997)? | Question 2: Is Company X a franking entity under section 202-15 of the ITAA 1997? | Question 3: Will dividends paid by Company X on the Instrument be frankable distributions for the purposes of subsection 202-40(1) of the ITAA 1997? | Question 4: Will the Commissioner make a determination under paragraph 204-30(3)(a) of the ITAA 1997 that a specified franking debit arise in the franking account of Company X in respect of franked dividends paid on each Instrument?