Taxation Determination TD 1999/20







1. The object of subsection 128F(6) is to ensure the exemption is only available to genuine public issues of debentures and not related party loans. However, it would be inconsistent with the purpose of the legislation to take an overly restrictive approach. | 2. Subsections 128F(5) and 128F(6) complement each other. Subsection 128F(5) deals with the situation where the company knew or had reasonable grounds to suspect, at the time of issue, the debenture would be acquired by an associate. Subsection 128F(6) deals with the situation where, at the time debenture interest is paid, the holder is an associate. | 3. Under subsection 128F(5), the associate may obtain the debentures in the capacity of dealer, manager or underwriter. It would be unreasonable to penalise an associate in one of these capacities where the associate has made a genuine attempt to offer the debentures for sale in accordance with paragraph 128F(3)(e), but is still holding the debentures at the time interest is paid. | 4. Similarly, it would be unreasonable to penalise associates who receive interest as paying agents or as operators of a clearing house. | 5. Subsection 128F(6) should, therefore, be read as denying an exemption from interest withholding tax where interest is paid to an associate holding debentures other than in a genuine temporary capacity. | Commissioner of Taxation 12 May 1999 | Previously released in draft form as TD 1999/D13


Related rulings: TD 1999/8 TD 1999/9 TD 1999/10 TD 1999/11 TD 1999/12 TD 1999/13 TD 1999/14 TD 1999/15 TD 1999/16 TD 1999/17 TD 1999/18 TD 1999/19 TD 1999/21 TD 1999/22 TD 1999/23 TD 1999/24 TD 1999/25 TD 1999/26
Legislative references: 128F 128F(3)(e) 128F(5) 128F(6)