Product Ruling PR 2014/5
Date of effect: 2 April 2014

What this ruling is about: 1. This Product Ruling sets out the Commissioner's opinion on the way in which the relevant provisions identified in the Ruling section apply to the defined class of entities who take part in the scheme to which this Ruling relates. All legislative references in this Ruling are to the Income Tax Assessment Act 1997 (ITAA 1997) unless otherwise indicated. 2. In this Product Ruling the scheme is an investment in the Macquarie NRAS Trust (the Trust) offered under a Product Disclosure Statement issued by Macquarie Financial Products Management Limited (MFPML) and using a limited recourse loan (the Loan) made by Macquarie Specialist Investments Lending Limited or some other Macquarie Group entity (the Loan Provider). 3. This Product Ruling does not address: Class of entities 4. This part of the Product Ruling specifies which entities can rely on the Ruling section of this Product Ruling and which entities cannot rely on the Ruling section. In this Product Ruling, those entities that can rely on the Ruling section are referred to as the Investor. 5. The class of entities who can rely on the Ruling section of this Product Ruling consists of those entities that are Australian residents for taxation purposes and: 6. The class of entities who can rely on the Ruling section of this Product Ruling does not include entities that: Superannuation Industry (Supervision) Act 1993 7. This Product Ruling does not address the provisions of the Superannuation Industry (Supervision) Act 1993 (SISA). The Commissioner gives no assurance that the scheme is an appropriate investment for a superannuation fund. The trustees of superannuation funds are advised that no consideration has been given in this Product Ruling as to whether investment in this scheme may contravene the provisions of SISA. Qualifications 8. The class of entities defined in this Product Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 16 to 20 of this Product Ruling. 9. If the scheme actually carried out is materially different from the scheme that is described in this Product Ruling, then:

Class of entities or scheme: 4. This part of the Product Ruling specifies which entities can rely on the Ruling section of this Product Ruling and which entities cannot rely on the Ruling section. In this Product Ruling, those entities that can rely on the Ruling section are referred to as the Investor. 5. The class of entities who can rely on the Ruling section of this Product Ruling consists of those entities that are Australian residents for taxation purposes and: 6. The class of entities who can rely on the Ruling section of this Product Ruling does not include entities that: Superannuation Industry (Supervision) Act 1993 7. This Product Ruling does not address the provisions of the Superannuation Industry (Supervision) Act 1993 (SISA). The Commissioner gives no assurance that the scheme is an appropriate investment for a superannuation fund. The trustees of superannuation funds are advised that no consideration has been given in this Product Ruling as to whether investment in this scheme may contravene the provisions of SISA. | Qualifications: 8. The class of entities defined in this Product Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 16 to 20 of this Product Ruling. 9. If the scheme actually carried out is materially different from the scheme that is described in this Product Ruling, then: 10. This Product Ruling applies prospectively from 2 April 2014, the date it is published. It therefore applies only to the specified class of entities that enter into the scheme from 2 April 2014 to 30 June 2017, being its period of application. This Product Ruling will continue to apply to those entities even after its period of application has ended for the scheme entered into during the period of application. 11. However the Product Ruling only applies to the extent that there is no change in the scheme or in the entity's involvement in the scheme. | Changes in the law: 12. Although this Product Ruling deals with the income tax laws enacted at the time it was issued, later amendments may impact on this Product Ruling. Any such changes will take precedence over the application of this Product Ruling and, to that extent, this Product Ruling will have no effect. 13. Entities who are considering participating in the scheme are advised to confirm with their taxation adviser that changes in the law have not affected this Product Ruling since it was issued. | Note to promoters and advisers: 14. Product Rulings were introduced for the purpose of providing certainty about tax consequences for entities in schemes such as this. In keeping with that intention the Commissioner suggests that promoters and advisers ensure that participants are fully informed of any legislative changes after the Product Ruling has issued. 15. Subject to paragraph 3 and the assumptions in paragraph 20 of this Product Ruling: 16. The scheme that is the subject of this Ruling is identified and described in the following documents: Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. 17. The documents highlighted in paragraph 16 of this Product Ruling are those that an Investor will enter into or be a party to. For the purposes of describing the scheme to which this Ruling applies, there are no other agreements, whether formal or informal, and whether or not legally enforceable, which an Investor will be a party to, which are a part of the scheme. Unless otherwise defined, capitalised terms in this Ruling take their meaning as per the documents listed in paragraph 16 in this Ruling. 18. All Australian Securities and Investments Commission (ASIC) requirements are, or will be, complied with for the term of the agreements. | Overview: 19. Following is a summary of the scheme: | Assumptions: 20. This Ruling is made on the basis of the following necessary assumptions: Commissioner of Taxation 2 April 2014 | Subsection 159GP(1) - a Unit in the Trust is not a 'security': 21. Subsection 159GP(1) of the ITAA 1936 defines the term 'security'. Units in a unit trust will not be a security under paragraphs (a), (b) or (c) of the definition in subsection 159GP(1). Furthermore, units in a unit trust will not fall within the definition in paragraph (d) of subsection 159GP(1) unless there is a contract between the 'manager' of the unit trust (now commonly referred to as the responsible entity) and the unit holder under which there is a liability to pay an amount, and on the facts, the contract is found to be debt like (see paragraphs 4(ii) and 34 to 39 of Taxation Ruling TR 96/14). 22. A Unit in the Trust is not considered to be a contract between MFPML and the Investor (the unit holder), nor are the obligations between MFPML and the Investor considered to be debt like. Therefore, a Unit in the Trust does not meet the definition of security under subsection 159GP(1) of the ITAA 1936. | Division 6 - trust distributions: 23. Where a beneficiary who is not under a legal disability is presently entitled to a share of the income of a trust estate, paragraph 97(1)(a) of the ITAA 1936 requires the beneficiary to include in their assessable income that share of the trust's net income. 24. As a beneficiary of the Trust, the Investor is assessable under section 97 of the ITAA 1936 on so much of that share of the net income of the trust estate to which they are presently entitled. The Investor's present entitlement is reflected in their rights to receive income derived by the Trust in which the Investor has an interest, proportionate to the number of Units he or she holds in the Trust. | Division 380 - National Rental Affordability Scheme: 25. Division 380 of the ITAA 1997 provides a tax offset to a taxpayer that participates in the National Rental Affordability Scheme (NRAS). The amount of the tax offset is stated in the NRAS certificate issued by the Secretary of the Department of Social Services (Housing Secretary). A fixed tax offset is provided in respect of each dwelling where the conditions of the NRAS Act and the NRAS Regulations are met. The tax offset is indexed each year according to movements in the Rents component of the Housing Group Consumer Price Index. 26. An NRAS consortium is defined in subsection 995-1(1) to mean a consortium, joint venture or NEJV: 27. A group of entities may form an NRAS consortium to collectively participate in the NRAS. A member of an NRAS consortium is eligible for a tax offset provided, inter alia, that the Housing Secretary issues a certificate to the approved participant of the NRAS consortium (subsection 380-14(1)). This is the entity that complies with the requirements of the NRAS Act and NRAS Regulations on behalf of the consortium. 28. The Trust is or will be a member of various NRAS consortia. The terms of each NRAS consortium are governed by a Consortium Agreement. Pursuant to the terms of each Consortium Agreement, the Trust will either lease Participating Dwellings from the owner and immediately after sub lease those dwellings to the Approved Participant of the NRAS consortium, or be assigned the Rental Debts in respect of the relevant Participating Dwellings by the Approved Participant. 29. Under the Consortium Agreements the Approved Participant will only receive the Annual Consortium Fees and Participation Fees if they have complied with the relevant provisions of the NRAS Act and NRAS Regulations. 30. Where an NRAS certificate is provided to the approved participant of an NRAS consortium, a member of that NRAS consortium will be deemed to have been issued with the certificate provided that the member derives NRAS rent from any of the NRAS dwellings covered by the certificate (section 380-14). Where the Trust is assigned the Rental Debts under the terms of a Consortium Agreement in respect of a Participating Dwelling, the Trust will derive NRAS rent. 31. NRAS rent is defined in subsection 995-1(1) as "rent derived from a NRAS dwelling under the National Rental Affordability Scheme for an income year." Each of the Approved Participants under the Consortium Agreements including a lease structure are considered to derive NRAS rent because they are involved in all the key elements of the NRAS such as liaising with the Housing Secretary and dealing with eligible tenants to whom the NRAS dwellings are rented (see ATO Interpretative Decision ATO ID 2009/146). The approved participant of an NRAS consortium may choose to relinquish their entitlement to the tax offset in favour of another member of the NRAS Consortium (section 380-11). Where an election is made by an Approved Participant to relinquish its tax offset entitlement in favour of the Trust, section 380-13 deems the Trust's rent under the Sub Lease to be NRAS rent. 32. Where an entity indirectly derives NRAS rent as a unit holder of a trust, they will be entitled to a tax offset (sections 380-15 and 380-25). Subsection 380-15(1) sets out the circumstances in which an entity to whom NRAS rent flows indirectly is entitled to a tax offset for an income year. The requirements of subsection 380-15(1) will be satisfied for an Investor where: 33. Regarding the application of paragraph 380-15(1)(b), NRAS rent will flow indirectly to an Investor in the Trust because the Investor is required to include a share of the Trust's net income in their assessable income under paragraph 97(1)(a) of the ITAA 1936 (paragraph 380-25(3)(b)). 34. The amount of an Investor's entitlement to a tax offset is the sum of the amounts worked out using the following formula from subsection 380-15(2) for each NRAS dwelling from which NRAS rent is derived: 35. An Investor's share of NRAS rent for an income year is the amount notionally allocated to the Investor, whether or not the Investor actually receives any of that NRAS rent (subsection 380-30(2)). That amount is equal to so much of the NRAS rent as is taken into account in working out the Investor's share of the net income of the Trust (column 3 of the table at subsection 380-30(3)). 36. As the entire amount of NRAS rent derived by the Trust is taken into account in calculating its net income, and therefore the Investor's share of the net income, the effect of the formula is to entitle an Investor to a tax offset in proportion to their share of the net income of the Trust included in assessable income under paragraph 97(1)(a) of the ITAA 1936. | Section 8-1: 37. Interest paid on a borrowing used to acquire income producing assets, such as units in a unit trust, is generally treated as deductible under section 8-1 where it is expected that assessable income would be derived from the investment. However, where there is a disproportion between interest incurred and income produced, an apportionment of outgoings may be appropriate depending upon the extent to which the expenditure is devoted to the gaining or producing of assessable income (see Taxation Ruling TR 95/33). 38. In determining the relevant apportionment, the Investor will take into account the amount of income they receive from the Trust plus their share of tax offsets they receive under Division 380. 39. The Investor's cash position under the scheme is likely to be a cash negative position, taking into account the share of the income of the Trust plus the tax offsets that arise under Division 380 and therefore, for the purpose of section 8-1, the interest incurred on the Loan is required to be apportioned as outlined in subparagraph 15(e) of this Product Ruling. | Division 247 - capital protection: 40. Division 247 limits the allowable deductions for expenditure incurred under a 'capital protected borrowing'. Broadly, a capital protected borrowing arises where an amount is borrowed under an arrangement where the borrower is protected against the fall in value of some specified securities, and where that borrowing is made for the purpose of investing in those securities. 41. Division 247 applies to a loan where the borrower uses the loan to acquire a unit and the borrower is protected against the fall in the market value of that unit (the protected thing). 42. An Investor enters into the Loan Agreement in order to acquire Units in the Trust. The Loan Provider's recourse against the Investor is limited to the amount which can be obtained by enforcing the rights relating to the Mortgaged Property (being the Units and their proceeds). Under the Scheme the Units could fall in market value if the Trust were to incur a loss and not be able to make a distribution of income, and the Investor does not receive any entitlements to tax offsets. 43. Therefore the Investor is wholly or partly protected against a fall in the market value of the acquired Units through the operation of the Loan Agreement. Where Units are redeemed by the Investor at Maturity, the limited recourse aspect of the Investment Loan means that the amount payable by the Investor to the Loan Provider is limited to the Investor's Units and their proceeds, and any amount recovered by the Loan Provider by enforcing the Deposit Charge. 44. Division 247 sets out a methodology for reasonably attributing a cost to the capital protection obtained by a borrower under a capital protected borrowing. Division 247 ignores any amount which is not in substance for capital protection or interest, in calculating the cost of capital protection (subsection 247-20(3)). 45. Under the scheme, the amount reasonably attributable to the cost of capital protection afforded by the limited recourse provisions of the Loan is worked out according to the method statement in subsection 247-20(3) as set out in subparagraph 15 of this Product Ruling: | Section 51AAA: 46. Under the scheme, it is contemplated that over the period of an Investor's involvement there will be assessable income derived by way of distributions of the net income of the Trust. As this income will be included in the assessable income of the Investor and is not as a result of a capital gain, section 51AAA of the ITAA 1936 has no application to the Investor. | Section 82KL: 47. The operation of section 82KL of the ITAA 1936 depends, among other things, on the identification of a certain quantum of 'additional benefit(s)'. Insufficient 'additional benefits' will be provided to trigger the application of section 82KL of the ITAA 1936. It will not apply to deny the deductions otherwise allowable under section 8-1 of the ITAA 1997. | Part 3-1 - application of CGT provisions to the Put Option: 48. If an Investor does not exercise the Put Option by the Maturity Date, the Put Option will expire (subsection 247-30(2)) and CGT Event C2 will happen under section 104-25. 49. As the investor will not receive any capital proceeds in respect of the expiry of the Put Option, a capital loss will be made by the investor in this regard, equal to the investor's reduced cost base of the Put Option. 50. The cost base and the reduced cost base of the Put Option will include the amount reasonably attributable to the cost of capital protection as calculated under Division 247 (subsections 110-25(2) and 110-55(2)). | Part IVA - anti-avoidance: 51. Provided that the scheme ruled on is entered into and carried out as disclosed in this Ruling, it is accepted that the scheme is an ordinary commercial transaction and Part IVA will not apply. 52. The following is a detailed contents list for this Ruling: © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft

Ruling: This Product Ruling has been given on the basis that the entity(s) that applied for the Product Ruling, and their associates, will abide by strict terms of use. Any failure to comply with the terms of use may lead to the withdrawal of this Product Ruling. 1. This Product Ruling sets out the Commissioner's opinion on the way in which the relevant provisions identified in the Ruling section apply to the defined class of entities who take part in the scheme to which this Ruling relates. All legislative references in this Ruling are to the Income Tax Assessment Act 1997 (ITAA 1997) unless otherwise indicated. 2. In this Product Ruling the scheme is an investment in the Macquarie NRAS Trust (the Trust) offered under a Product Disclosure Statement issued by Macquarie Financial Products Management Limited (MFPML) and using a limited recourse loan (the Loan) made by Macquarie Specialist Investments Lending Limited or some other Macquarie Group entity (the Loan Provider). 3. This Product Ruling does not address: | Class of entities: 4. This part of the Product Ruling specifies which entities can rely on the Ruling section of this Product Ruling and which entities cannot rely on the Ruling section. In this Product Ruling, those entities that can rely on the Ruling section are referred to as the Investor. 5. The class of entities who can rely on the Ruling section of this Product Ruling consists of those entities that are Australian residents for taxation purposes and: 6. The class of entities who can rely on the Ruling section of this Product Ruling does not include entities that: Superannuation Industry (Supervision) Act 1993 7. This Product Ruling does not address the provisions of the Superannuation Industry (Supervision) Act 1993 (SISA). The Commissioner gives no assurance that the scheme is an appropriate investment for a superannuation fund. The trustees of superannuation funds are advised that no consideration has been given in this Product Ruling as to whether investment in this scheme may contravene the provisions of SISA. | Qualifications: 8. The class of entities defined in this Product Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 16 to 20 of this Product Ruling. 9. If the scheme actually carried out is materially different from the scheme that is described in this Product Ruling, then:


Appendix: Subsection 159GP(1) - a Unit in the Trust is not a 'security': 21. Subsection 159GP(1) of the ITAA 1936 defines the term 'security'. Units in a unit trust will not be a security under paragraphs (a), (b) or (c) of the definition in subsection 159GP(1). Furthermore, units in a unit trust will not fall within the definition in paragraph (d) of subsection 159GP(1) unless there is a contract between the 'manager' of the unit trust (now commonly referred to as the responsible entity) and the unit holder under which there is a liability to pay an amount, and on the facts, the contract is found to be debt like (see paragraphs 4(ii) and 34 to 39 of Taxation Ruling TR 96/14). 22. A Unit in the Trust is not considered to be a contract between MFPML and the Investor (the unit holder), nor are the obligations between MFPML and the Investor considered to be debt like. Therefore, a Unit in the Trust does not meet the definition of security under subsection 159GP(1) of the ITAA 1936. | Division 6 - trust distributions: 23. Where a beneficiary who is not under a legal disability is presently entitled to a share of the income of a trust estate, paragraph 97(1)(a) of the ITAA 1936 requires the beneficiary to include in their assessable income that share of the trust's net income. 24. As a beneficiary of the Trust, the Investor is assessable under section 97 of the ITAA 1936 on so much of that share of the net income of the trust estate to which they are presently entitled. The Investor's present entitlement is reflected in their rights to receive income derived by the Trust in which the Investor has an interest, proportionate to the number of Units he or she holds in the Trust. | Division 380 - National Rental Affordability Scheme: 25. Division 380 of the ITAA 1997 provides a tax offset to a taxpayer that participates in the National Rental Affordability Scheme (NRAS). The amount of the tax offset is stated in the NRAS certificate issued by the Secretary of the Department of Social Services (Housing Secretary). A fixed tax offset is provided in respect of each dwelling where the conditions of the NRAS Act and the NRAS Regulations are met. The tax offset is indexed each year according to movements in the Rents component of the Housing Group Consumer Price Index. 26. An NRAS consortium is defined in subsection 995-1(1) to mean a consortium, joint venture or NEJV: 27. A group of entities may form an NRAS consortium to collectively participate in the NRAS. A member of an NRAS consortium is eligible for a tax offset provided, inter alia, that the Housing Secretary issues a certificate to the approved participant of the NRAS consortium (subsection 380-14(1)). This is the entity that complies with the requirements of the NRAS Act and NRAS Regulations on behalf of the consortium. 28. The Trust is or will be a member of various NRAS consortia. The terms of each NRAS consortium are governed by a Consortium Agreement. Pursuant to the terms of each Consortium Agreement, the Trust will either lease Participating Dwellings from the owner and immediately after sub lease those dwellings to the Approved Participant of the NRAS consortium, or be assigned the Rental Debts in respect of the relevant Participating Dwellings by the Approved Participant. 29. Under the Consortium Agreements the Approved Participant will only receive the Annual Consortium Fees and Participation Fees if they have complied with the relevant provisions of the NRAS Act and NRAS Regulations. 30. Where an NRAS certificate is provided to the approved participant of an NRAS consortium, a member of that NRAS consortium will be deemed to have been issued with the certificate provided that the member derives NRAS rent from any of the NRAS dwellings covered by the certificate (section 380-14). Where the Trust is assigned the Rental Debts under the terms of a Consortium Agreement in respect of a Participating Dwelling, the Trust will derive NRAS rent. 31. NRAS rent is defined in subsection 995-1(1) as "rent derived from a NRAS dwelling under the National Rental Affordability Scheme for an income year." Each of the Approved Participants under the Consortium Agreements including a lease structure are considered to derive NRAS rent because they are involved in all the key elements of the NRAS such as liaising with the Housing Secretary and dealing with eligible tenants to whom the NRAS dwellings are rented (see ATO Interpretative Decision ATO ID 2009/146). The approved participant of an NRAS consortium may choose to relinquish their entitlement to the tax offset in favour of another member of the NRAS Consortium (section 380-11). Where an election is made by an Approved Participant to relinquish its tax offset entitlement in favour of the Trust, section 380-13 deems the Trust's rent under the Sub Lease to be NRAS rent. 32. Where an entity indirectly derives NRAS rent as a unit holder of a trust, they will be entitled to a tax offset (sections 380-15 and 380-25). Subsection 380-15(1) sets out the circumstances in which an entity to whom NRAS rent flows indirectly is entitled to a tax offset for an income year. The requirements of subsection 380-15(1) will be satisfied for an Investor where: 33. Regarding the application of paragraph 380-15(1)(b), NRAS rent will flow indirectly to an Investor in the Trust because the Investor is required to include a share of the Trust's net income in their assessable income under paragraph 97(1)(a) of the ITAA 1936 (paragraph 380-25(3)(b)). 34. The amount of an Investor's entitlement to a tax offset is the sum of the amounts worked out using the following formula from subsection 380-15(2) for each NRAS dwelling from which NRAS rent is derived: 35. An Investor's share of NRAS rent for an income year is the amount notionally allocated to the Investor, whether or not the Investor actually receives any of that NRAS rent (subsection 380-30(2)). That amount is equal to so much of the NRAS rent as is taken into account in working out the Investor's share of the net income of the Trust (column 3 of the table at subsection 380-30(3)). 36. As the entire amount of NRAS rent derived by the Trust is taken into account in calculating its net income, and therefore the Investor's share of the net income, the effect of the formula is to entitle an Investor to a tax offset in proportion to their share of the net income of the Trust included in assessable income under paragraph 97(1)(a) of the ITAA 1936. | Section 8-1: 37. Interest paid on a borrowing used to acquire income producing assets, such as units in a unit trust, is generally treated as deductible under section 8-1 where it is expected that assessable income would be derived from the investment. However, where there is a disproportion between interest incurred and income produced, an apportionment of outgoings may be appropriate depending upon the extent to which the expenditure is devoted to the gaining or producing of assessable income (see Taxation Ruling TR 95/33). 38. In determining the relevant apportionment, the Investor will take into account the amount of income they receive from the Trust plus their share of tax offsets they receive under Division 380. 39. The Investor's cash position under the scheme is likely to be a cash negative position, taking into account the share of the income of the Trust plus the tax offsets that arise under Division 380 and therefore, for the purpose of section 8-1, the interest incurred on the Loan is required to be apportioned as outlined in subparagraph 15(e) of this Product Ruling. | Division 247 - capital protection: 40. Division 247 limits the allowable deductions for expenditure incurred under a 'capital protected borrowing'. Broadly, a capital protected borrowing arises where an amount is borrowed under an arrangement where the borrower is protected against the fall in value of some specified securities, and where that borrowing is made for the purpose of investing in those securities. 41. Division 247 applies to a loan where the borrower uses the loan to acquire a unit and the borrower is protected against the fall in the market value of that unit (the protected thing). 42. An Investor enters into the Loan Agreement in order to acquire Units in the Trust. The Loan Provider's recourse against the Investor is limited to the amount which can be obtained by enforcing the rights relating to the Mortgaged Property (being the Units and their proceeds). Under the Scheme the Units could fall in market value if the Trust were to incur a loss and not be able to make a distribution of income, and the Investor does not receive any entitlements to tax offsets. 43. Therefore the Investor is wholly or partly protected against a fall in the market value of the acquired Units through the operation of the Loan Agreement. Where Units are redeemed by the Investor at Maturity, the limited recourse aspect of the Investment Loan means that the amount payable by the Investor to the Loan Provider is limited to the Investor's Units and their proceeds, and any amount recovered by the Loan Provider by enforcing the Deposit Charge. 44. Division 247 sets out a methodology for reasonably attributing a cost to the capital protection obtained by a borrower under a capital protected borrowing. Division 247 ignores any amount which is not in substance for capital protection or interest, in calculating the cost of capital protection (subsection 247-20(3)). 45. Under the scheme, the amount reasonably attributable to the cost of capital protection afforded by the limited recourse provisions of the Loan is worked out according to the method statement in subsection 247-20(3) as set out in subparagraph 15 of this Product Ruling: | Section 51AAA: 46. Under the scheme, it is contemplated that over the period of an Investor's involvement there will be assessable income derived by way of distributions of the net income of the Trust. As this income will be included in the assessable income of the Investor and is not as a result of a capital gain, section 51AAA of the ITAA 1936 has no application to the Investor. | Section 82KL: 47. The operation of section 82KL of the ITAA 1936 depends, among other things, on the identification of a certain quantum of 'additional benefit(s)'. Insufficient 'additional benefits' will be provided to trigger the application of section 82KL of the ITAA 1936. It will not apply to deny the deductions otherwise allowable under section 8-1 of the ITAA 1997. | Part 3-1 - application of CGT provisions to the Put Option: 48. If an Investor does not exercise the Put Option by the Maturity Date, the Put Option will expire (subsection 247-30(2)) and CGT Event C2 will happen under section 104-25. 49. As the investor will not receive any capital proceeds in respect of the expiry of the Put Option, a capital loss will be made by the investor in this regard, equal to the investor's reduced cost base of the Put Option. 50. The cost base and the reduced cost base of the Put Option will include the amount reasonably attributable to the cost of capital protection as calculated under Division 247 (subsections 110-25(2) and 110-55(2)). | Part IVA - anti-avoidance: 51. Provided that the scheme ruled on is entered into and carried out as disclosed in this Ruling, it is accepted that the scheme is an ordinary commercial transaction and Part IVA will not apply.


What this Ruling is about | NOT LEGALLY BINDING SECTION: | A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. | If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. | Potential participants must form their own view about the commercial and financial viability of the product. The Commissioner recommends a financial (or other) adviser be consulted for such information. | This Product Ruling provides certainty for potential participants by confirming that the tax benefits set out in the Ruling part of this document are available, provided that the scheme is carried out in accordance with the information we have been given, and have described below in the Scheme part of this document. If the scheme is not carried out as described, participants lose the protection of this Product Ruling. | Appendix 2 - Detailed contents list


Related rulings: TR 95/33 TR 96/14
Legislative references: ITAA 1936 51AAA ITAA 1936 82KL ITAA 1936 Pt III Div 6 ITAA 1936 97 ITAA 1936 97(1)(a) ITAA 1936 159GP(1) ITAA 1936 Sch 2F 272-5(3) ITAA 1936 Pt IVA ITAA 1997 ITAA 1997 8-1 ITAA 1997 104-25 ITAA 1997 104-25(3) ITAA 1997 110-25(2) ITAA 1997 110-55(2) ITAA 1997 Div 247 ITAA 1997 247-20(3) ITAA 1997 247-20(4) ITAA 1997 247-20(5) ITAA 1997 247-20(6) ITAA 1997 247-30(2) ITAA 1997 Div 380 ITAA 1997 380-11 ITAA 1997 380-13 ITAA 1997 380-14 ITAA 1997 380-14(1) ITAA 1997 380-15 ITAA 1997 380-15(1) ITAA 1997 380-15(1)(a) ITAA 1997 380-15(1)(b) ITAA 1997 380-15(1)(c) ITAA 1997 380-15(1)(d) ITAA 1997 380-15(2) ITAA 1997 380-25 ITAA 1997 380-25(3) ITAA 1997 380-25(3)(b) ITAA 1997 380-30(2) ITAA 1997 380-30(3) ITAA 1997 995-1 ITAA 1997 995-1(1) SISA 1993 TAA 1953 NRAS Act NRAS Regulations
Subject references: limited recourse loans product rulings public rulings tax administration unit trusts
Other references: ATO ID 2009/146