Private ruling: Division 250 of the Income Tax Assessment Act 1997
Published: March 2014

Ruling: The ruling concerned the following: | 1. Will the 'assets' of the entity be put to a tax preferred use under section 250-60 of the Income Tax Assessment Act 1997 (ITAA 1997) if none of the following entities are tax preferred entities: | • the entity | • the lessee entity, and | • any other entity that is a 'connected entity' of the aforementioned entities as defined in subsection 995-1(1) of the ITAA 1997? | 2. If the answer to question 1 is affirmative, or if the entity, or any of its connected entities, are a tax preferred entity and the 'assets' are put to a tax preferred use, is paragraph 250-15(c) of the ITAA 1997 satisfied when lease payments are received by the entity? | 3. Will the entity lack a 'predominant economic interest' in the 'assets' as a result of the application of paragraph 250-135(2)(b) of the ITAA 1997 if the entity, its connected entities and all entities that provide financial benefits in relation to the tax preferred use of the assets are members of the tax preferred sector? | The Commissioner ruled that: | 1. No. The 'assets' of the entity will not be put to a tax preferred use under section 250-60 of the ITAA 1997 if none of the following entities are tax preferred entities: | • the entity | • the lessee entity, and | • any other entity that is a 'connected entity' of the aforementioned entities as defined in subsection 995-1(1) of the ITAA 1997. | 2. Yes. If the entity, or any of its connected entities, are a tax preferred entity and the 'assets' are put to a tax preferred use, paragraph 250-15(c) of the ITAA 1997 is satisfied when lease payments are received by the entity. | 3. No. The entity will not lack a 'predominant economic interest' in the 'assets' as a result of the application of paragraph 250-135(2)(b) of the ITAA 1997 if the entity, its connected entities and all entities that provide financial benefits in relation to the tax preferred use of the 'assets' are members of the tax preferred sector.