Private ruling: Capital raising and non-share dividends
Published: August 2017

Ruling: Q1: Will each Instrument be treated as an equity interest (as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997)) under section 974-70 of the ITAA 1997? | A1: Yes. | Q2: Will issuing the Instrument cause Entity B to cease to be a 'wholly-owned subsidiary' of Entity A under section 703-30 of the ITAA 1997? | A2: No. | Q3: Will the Instrument be issued at or through a permanent establishment of an ADI in a listed country for the purposes of paragraph 215-10(1)(c) of the ITAA 1997? | A3: Yes. | Q4: Will the funds from the issuance of the Instrument be raised and applied solely for one or more of the permitted purposes under paragraphs 215-10(2)(a) and (c) for the purposes of paragraph 215-10(1)(d) of the ITAA 1997? | A4: Yes. | Q5: Will the Distributions made on the Instrument be unfrankable non-share dividends for the purposes of section 215-10 of the ITAA 1997? | A5: Yes.

Relevant facts and circumstances: The head entity of a tax consolidated group (Entity A) applied for a private binding ruling in respect of the issuance of an Instrument by Entity B (wholly-owned subsidiary of Entity A) via its foreign branch in order to raise capital.