Private ruling: Off-market share buy-back
Date of advice: 28 August 2018
Published: October 2018

Ruling: Q1: Will the Commissioner make a Determination pursuant to paragraph 204-30(3)(a) of the ITAA 1997 in respect of the franking account of the Company in relation to the Buy-Back? | A1: No. | Q2: Will the Commissioner exercise his discretion to make a Determination under paragraph 177EA(5)(a) of the ITAA 1936, which the Company will accept, that a franking debit arises in the franking account of the Company in respect of franked dividends paid as part of the Buy-Back? | A2: Yes. | Q3: Will the Commissioner make a Determination under paragraph 177EA(5)(a) of the ITAA 1936, which the Company will accept, that a franking debit arises in the franking account of the Company in respect of franked dividends paid as part of the Buy-Back, calculated in accordance with the following formula?: Number of shares bought back x Franking Credit attaching to each share bought back x % non-residents in tax treaty nations x 0.5 | A3: Yes. | Q4: Will the Company be entitled to a deduction pursuant to section 230-15 of the ITAA 1997 in respect of interest on borrowings to fund payment of the Buy-Back price? | A4: Yes. | Q5: Will the Commissioner make a determination pursuant to subsection 45C(3) of the ITAA 1936 to debit the franking account of the Company in relation to the Buy-Back? | A5: No. Facts The Company conducted an off-market share buy-back and requested a private ruling. The Commissioner has ruled on each of the questions in the private ruling application.


Relevant legislative provisions: Income Tax Assessment Act 1936 section 45C | Income Tax Assessment Act 1936 section 177EA | Income Tax Assessment Act 1997 section 204-30 | Income Tax Assessment Act 1997 section 230-15