Class Ruling CR 2013/18
Date of effect: 20 March 2013

What this ruling is about: 1. This Ruling sets out the Commissioner's opinion on the way in which the relevant provisions identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates. Relevant provisions 2. The relevant provisions dealt with in this Ruling are: All subsequent legislative references in this Ruling are to the ITAA 1997 unless otherwise stated. Class of entities 3. The class of entities to which this Ruling applies are investors who will be allotted perpetual, convertible, non-cumulative, unguaranteed and unsecured preference shares issued by National Australia Bank Limited (NAB) called convertible preference shares (CPS), and who: 4. The investors described in the above paragraph are referred to in this Ruling as Holders. 5. The class of entities to which this Ruling applies does not extend to the holders of NAB CPS who do not acquire their NAB CPS by initial application under the Prospectus. Qualifications 6. This Ruling does not consider the tax implications of the Redemption or Resale of NAB CPS. 7. This Ruling does not consider how the taxation law applies to a Nominated Purchaser who acquires their NAB CPS under the Resale facility. 8. This Ruling does not consider how the gross-up and tax offset rules in Division 207 apply to a Holder that is a partnership or the trustee of a trust, or to indirect distributions to partners in a partnership, or beneficiaries or trustees of a trust. 9. This Ruling does not deal with how the taxation law applies to NAB in relation to the issue of the NAB CPS. 10. This Ruling does not deal with how the taxation law applies to Holders who hold their NAB CPS as trading stock or revenue assets. 11. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 15 to 72 of this Ruling. 12. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, or if material amendments are made to the CPS Terms (including amendments under clause 18 of the CPS Terms), then: 13. This work is copyright. Apart from any use as permitted under the Copyright Act 1968 , no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to:

Class of entities or scheme: 3. The class of entities to which this Ruling applies are investors who will be allotted perpetual, convertible, non-cumulative, unguaranteed and unsecured preference shares issued by National Australia Bank Limited (NAB) called convertible preference shares (CPS), and who: 4. The investors described in the above paragraph are referred to in this Ruling as Holders. 5. The class of entities to which this Ruling applies does not extend to the holders of NAB CPS who do not acquire their NAB CPS by initial application under the Prospectus. | Qualifications: 6. This Ruling does not consider the tax implications of the Redemption or Resale of NAB CPS. 7. This Ruling does not consider how the taxation law applies to a Nominated Purchaser who acquires their NAB CPS under the Resale facility. 8. This Ruling does not consider how the gross-up and tax offset rules in Division 207 apply to a Holder that is a partnership or the trustee of a trust, or to indirect distributions to partners in a partnership, or beneficiaries or trustees of a trust. 9. This Ruling does not deal with how the taxation law applies to NAB in relation to the issue of the NAB CPS. 10. This Ruling does not deal with how the taxation law applies to Holders who hold their NAB CPS as trading stock or revenue assets. 11. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 15 to 72 of this Ruling. 12. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, or if material amendments are made to the CPS Terms (including amendments under clause 18 of the CPS Terms), then: 13. This work is copyright. Apart from any use as permitted under the Copyright Act 1968 , no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to: 14. This Ruling applies from 20 March 2013 to 30 June 2021. The Ruling continues to apply after 30 June 2021 to all entities within the specified class who entered into the specified scheme by acquiring their NAB CPS as a result of making an application under the Prospectus. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). 15. The following description of the scheme is based on information provided by the applicant (Greenwoods and Freehills Pty Ltd). The following documents (Transaction Documents), or relevant parts of them, form part of and are to be read with this description: 16. In this Ruling, unless otherwise defined, capitalised terms take the meaning that they have in the CPS Terms and the Prospectus. 17. National Australia Bank Limited (NAB) is an Australian resident company. It is an authorised deposit-taking institution (ADI) regulated by the Australian Prudential Regulation Authority (APRA) and other regulatory bodies. 18. NAB is listed on the Australian Securities Exchange (ASX). | The Offer of NAB CPS: 19. NAB has invited investors to subscribe for $1.4 billion (with the ability to raise more or less) of convertible preference shares to be issued by NAB (NAB CPS). 20. The NAB CPS are perpetual fully paid mandatorily convertible preference shares in the capital of NAB. 21. The NAB CPS will be issued by NAB in Australia, that is, the NAB CPS will not be issued by a foreign branch or subsidiary of NAB. 22. The NAB CPS are being offered (the Offer) pursuant to the Prospectus. 23. The Offer has been made to the public at large and is not restricted to a particular category of investors. Any Australian resident is able to purchase the NAB CPS under the Offer and the lead managers are permitted to distribute the CPS prospectus to non-residents in those jurisdictions where the Offer is legally able to be made. 24. The majority of the Holders are expected to be residents of Australia for tax purposes, although some may be non-residents. 25. The classes of applicants for the NAB CPS and how they apply for the NAB CPS are as follows: NAB has applied for the NAB CPS to be listed on the ASX following completion of the Offer. 26. The date of the contract of allotment for the NAB CPS will be 20 March 2013. | Reasons for issuing the NAB CPS: 27. The Offer has been made as part of NAB's ongoing capital management strategy within the regulatory capital guidelines prescribed by APRA. The issue of the NAB CPS will be a new capital raising and will not be refinancing any securities that NAB currently has on issue. NAB will use the proceeds for general corporate purposes. 28. APRA has confirmed that the NAB CPS will qualify as Additional Tier 1 capital under APRA's new Basel III Prudential Standards that apply from 1 January 2013. | Forecasted franking account balance: 29. NAB expects to pay fully franked dividends in the foreseeable future to all the holders of interests in NAB that are capable of giving rise to frankable distributions, including the Holders and the holders of Ordinary Shares, to the extent of the franking credits in its franking account. | Terms of the NAB CPS: 30. The NAB CPS are issued, and may be Redeemed, Converted or Resold, by NAB according to the CPS Terms. The Issue Price of each NAB CPS is A$100. | Dividend Payment Dates: 31. Subject to the CPS Terms, NAB shall pay a dividend in respect of a NAB CPS on the following dates (each a Dividend Payment Date): 32. A Dividend is only payable on a Dividend Payment Date to those persons registered as Holders on the Record Date for that Dividend. | Calculation of Dividends on NAB CPS: 33. The Dividend payable in respect of each NAB CPS on a Dividend Payment Date is calculated in accordance with the following formula: | Franking adjustments: 34. The Dividends are expected to be fully franked. However, if a Dividend is not franked to 100%, the Dividend will be grossed-up to the extent that the franking percentage of the Dividend is less than 100%, as determined by the formula in clause 2.5 of the CPS Terms. | Conditions to payment of Dividends: 35. A Dividend will be paid only if: The term 'Payment Condition' is defined in clause 24.1 of the CPS Terms. | Dividends are non-cumulative: 36. Dividends are non-cumulative. If all or any part of a Dividend is not paid in full because of the restrictions in clause 2.6 of the CPS Terms or for any other reason: No interest accrues on any unpaid Dividends and the Holders have no claim or entitlement in respect of interest on any unpaid Dividends. | Restrictions in the case of non-payment of Dividends: 37. If a Dividend on a NAB CPS has not been paid in full (Relevant Dividend) on a Dividend Payment Date (Relevant Dividend Payment Date) for any reason, NAB must not, unless approved by an Ordinary Resolution, until and including the Dividend Payment Date following the Relevant Dividend Payment Date: unless the Relevant Dividend is paid in full within 3 Business Days of the Relevant Dividend Payment Date. | Mandatory Conversion: 38. Subject to the Mandatory Conversion Conditions being satisfied, all the NAB CPS must Convert into Ordinary Shares on the Mandatory Conversion Date. 39. The Mandatory Conversion Date will be the first to occur of the following dates (each a Relevant Mandatory Conversion Date) on which the Mandatory Conversion Conditions are satisfied: | Mandatory Conversion Conditions: 40. The Mandatory Conversion Conditions for each Relevant Mandatory Conversion Date are: | Mandatory Conversion on Loss Absorption Event: 41. Clause 4.4 of the CPS Terms states that on the date on which a Loss Absorption Event occurs, NAB must determine the number of NAB CPS that will convert into Ordinary Shares. On the Loss Absorption Event Conversion Date, the relevant number of NAB CPS will Convert immediately and irrevocably (paragraph 4.4(c) of the CPS Terms). 42. Conversion on account of a Loss Absorption Event is not subject to the Mandatory Conversion Conditions (paragraph 4.7(a) of the CPS Terms). 43. According to clause 4.1, a Loss Absorption Event is each of: 44. Under clause 4.2, a Common Equity Trigger Event occurs when either or both of the Common Equity Tier 1 Ratio in respect of the NAB Level 1 Group and the NAB Level 2 Group as determined by NAB or APRA at any time is equal to or less than 5.125%. 45. If a Common Equity Trigger Event occurs, NAB must convert into Ordinary Shares or write-off: 46. Under clause 4.3, a Non-Viability Trigger Event means APRA has provided a written determination to NAB that the conversion into NAB Ordinary Shares or write off of Relevant Tier 1 Capital Instruments in accordance with their terms or by operation of law is necessary because: 47. If a Non-Viability Trigger Event occurs, NAB must convert into Ordinary Shares or write-off: 48. Clause 4.5 states that where on the Loss Absorption Event Conversion Date an Inability Event subsists (defined in clause 24.1 of the CPS Terms to mean that NAB is prevented by applicable law or order of any court or action of any government authority or any other reason from Converting the NAB CPS), and Conversion has not been effected within 5 days after the Loss Absorption Event Conversion Date, then Conversion on account of the Loss Absorption Event will not apply and those NAB CPS will be Written Off. This means that, in respect of a NAB CPS and a Loss Absorption Event Conversion Date: | Mandatory Conversion on Acquisition Event: 49. Clause 5.1 states that if an Acquisition Event occurs, NAB must convert all of the NAB CPS on the Acquisition Conversion Date. 50. Clause 24.1 defines an Acquisition Event as, broadly, any one of the following events: provided that it is not a NOHC Event. | Optional Conversion by NAB: 51. Clause 6.1 of the CPS Terms states that NAB may, with APRA's prior written approval, elect to Convert: | Conversion mechanics: 52. Clause 7.1 of the CPS Terms states that Conversion involves the following: 53. Paragraph 7.1(d) states that a NAB CPS, upon Conversion, confers all of the rights attaching to one NAB Ordinary Share. All other rights conferred or restrictions imposed on that NAB CPS under the CPS Terms will no longer have effect (except for accrued rights). The Ordinary Share resulting from the Conversion will rank equally with all other Ordinary Shares. Conversion does not constitute a redemption, buy-back, cancellation or termination of NAB CPS or an issue, allotment or creation of a new Ordinary Share (other than the allotment of an additional number of Ordinary Shares under paragraph 7.1(b)). 54. Clause 7.9 states that each Ordinary Share issued or arising upon Conversion ranks equally with all other fully paid Ordinary Shares. 55. Under clause 7.12, if on a Conversion Date (other than a Loss Absorption Event Conversion Date) an Ordinary Share is not issued or delivered in respect of a NAB CPS, that NAB CPS remains on issue (and will continue to entitle the Holder to Dividends in accordance with clause 2) until the Ordinary Share is issued to the Holder or the NAB CPS is Redeemed or Resold, and a Holder shall have no claim in respect of that failure other than for specific performance of the obligation to issue or deliver the Ordinary Shares. This clause does not affect the obligation of NAB to issue or deliver the Ordinary Shares when required in accordance with the CPS Terms. 56. Under clause 7.13, if NAB CPS of a Holder are required to be Converted and the Holder has notified NAB that it does not wish to receive Ordinary Shares as a result of Conversion, on the Conversion Date, the Holder's rights in relation to each such NAB CPS being Converted are immediately and irrevocably terminated and NAB will issue the Conversion Number of Ordinary Shares to a nominee to hold on trust for sale for the benefit of the relevant Holder. At the first opportunity to sell the Ordinary Shares, the nominee will arrange for their sale and pay the proceeds less selling costs to the relevant Holder. | Optional Redemption by NAB: 57. Clause 8.1 of the CPS Terms states that NAB may, with APRA's prior written approval, elect to Redeem: 58. Clause 24.1 defines 'Redemption' to mean the redemption, buy- back (other than an on-market buy-back within the meaning of the Corporations Act ) or reduction of capital, or any combination of such actions in accordance with the CPS Terms. | Redemption mechanics: 59. Clause 9.2 of the CPS Terms states that the NAB CPS will be Redeemed by payment on the Redemption Date of an amount equal to the Issue Price to the Holder. Under clause 9.3, where the Redemption involves a buy-back of the NAB CPS, the Directors may determine that the consideration payable for each NAB CPS that is bought back will include an amount (in addition to the Issue Price) equal to a Dividend calculated in accordance with clause 2 for the Dividend Period ending on (but not including) the Redemption Date. | Optional Resale: 60. Clause 10.1 of the CPS Terms states that NAB may, with APRA's prior written approval, elect to Resell: | Resale mechanics: 61. Clause 11.2 of the CPS Terms states that if NAB elects to Resell NAB CPS, NAB must appoint one or more Nominated Purchasers for the Resale on such terms as may be agreed between NAB and the Nominated Purchasers. 62. Clause 11.4 states that each Holder on the Resale Date is taken irrevocably to offer to sell the NAB CPS to the Nominated Purchaser(s) on the Resale Date for the Resale Price. Resale Price means, for a NAB CPS, a cash amount equal to its Issue Price. 63. Clause 11.5 states that on the Resale Date subject to payment by the Nominated Purchaser of the Resale Price to the Holders, all right, title and interest in such NAB CPS (excluding the right to any Dividend payable on that date) will be transferred to the Nominated Purchaser free from Encumbrances. | Ranking and subordination: 64. Under clause 16.1 of the CPS Terms, NAB CPS will rank in respect of payment of Dividends: 65. Clause 16.2 states that in a winding up of NAB, a NAB CPS confers upon its Holder the right to payment in cash of an amount equal to the Liquidation Amount out of the surplus (if any) available for distribution to shareholders, but no further or other right to participate in the assets of NAB or a return of capital in the winding up. Liquidation Amount is defined in clause 24.1 to be the sum of A$100 plus the amount of any Dividend resolved to be paid but unpaid. 66. Clause 16.3 states that NAB CPS rank in respect of payment of the Liquidation Amount in a winding up of NAB: | Voting rights: 67. The NAB CPS generally do not have voting rights, except in the limited circumstances as described in clause 17.2 of the CPS Terms. | Substitution of Approved NOHC as issuer of ordinary shares: 68. Clause 19 of the CPS Terms provides for the substitution of an Approved NOHC as the issuer of ordinary shares on the Conversion of the NAB CPS. Clause 24.1 defines a NOHC as a non-operating holding company within the meaning of the Banking Act 1959 . 69. Clause 24.1 defines a NOHC Event as an event which would otherwise be an Acquisition Event which is initiated by the Directors, acting as a board, and the result of which is that the ultimate holding company of NAB would be a NOHC (meaning a non-operating holding company within the meaning of the Banking Act ). 70. NAB may give a notice to the Holders before the NOHC Event occurs specifying the amendments to the CPS Terms which will be made to effect the substitution of an Approved NOHC as the issuer of ordinary shares of the Approved NOHC to Holders on Conversion of the NAB CPS. This means that, on Conversion, each NAB CPS that is being Converted will be automatically transferred by each Holder to the Approved NOHC (or another entity which meets the stated criteria) and each Holder will be issued a number of ordinary shares in the capital of the Approved NOHC equal to the Conversion Number. | Other matters: 71. The Ruling is made on the basis that: | Acquisition time of the NAB CPS: 72. Under item 2 of the table in section 109-10, a Holder will acquire their NAB CPS on 20 March 2013, being the date the contract for the allotment of the NAB CPS was entered into. | Cost base and reduced cost base of the NAB CPS: 73. Under subsections 110-25(2) and 110-55(2), the first element of the cost base and reduced cost base of each NAB CPS will be $100. | Inclusion of Dividends and franking credits in assessable income: 74. The Holders must include in their assessable income all Dividends received in respect of their NAB CPS under subparagraph 44(1)(a)(i) of the ITAA 1936, and the amount of the franking credit on those Dividends under subsection 207-20(1), unless Subdivision 207-D applies. | Entitlement to a tax offset: 75. The Holders are entitled to a tax offset equal to the franking credit on the Dividends under subsection 207-20(2), unless Subdivision 207-D applies. 76. The Holders who are entitled to a franking credit tax offset under Division 207 will be subject to the refundable tax offset rules in Division 67. Certain trustees and corporate tax entities are excluded from the refundable tax offset rules under section 67-25. | Imputation benefits - streaming: 77. The Commissioner will not make a determination under paragraph 204-30(3)(c) to deny the whole, or any part, of the imputation benefits received by the Holders in respect of the Dividends paid on the NAB CPS. | Section 177EA of the ITAA 1936: 78. The Commissioner will not make a determination under paragraph 177EA(5)(b) of the ITAA 1936 to deny the whole, or any part, of the imputation benefits received by the Holders in respect of the Dividends paid on the NAB CPS. | Gross-up and tax offset: 79. Section 207-145 will not apply to the Dividends received by the Holders in respect of the NAB CPS. Accordingly, section 207-145 will not adjust the Holders' assessable income to exclude the amount of the franking credit on the Dividends, nor will it deny the tax offset to which the Holders would otherwise be entitled. | Qualified person and the Resale facility: 80. For the purpose of determining whether a Holder is a 'qualified person' in relation to the Dividends under Division 1A of former Part IIIAA of the ITAA 1936, the Resale facility, of itself, will not affect a Holder's risks of loss or opportunities for gain in respect of the NAB CPS. This is because the Resale facility does not constitute a separate position (former sections 160APHM and 160APHJ of the ITAA 1936). | Conversion of each NAB CPS - CGT implications: 81. The Conversion of each NAB CPS, which consists of the variation of the rights attached to a NAB CPS and the allotment of additional Ordinary Shares, will not result in any CGT event happening. 82. Specifically, CGT event C2 in section 104-25 will not happen upon the Conversion of each NAB CPS. Furthermore, CGT event H2 in section 104-155 will not happen upon the Conversion of each NAB CPS because it includes the allotment of additional Ordinary Shares, which results in an adjustment being made to the cost base and reduced cost base of each NAB CPS. | NAB CPS that are Written Off - CGT implications: 83. CGT event H2 in section 104-155 will happen when the NAB CPS are Written Off. However, a Holder will not make a capital gain or a capital loss from CGT event H2 happening as there will be no capital proceeds or incidental costs incurred because of the NAB CPS being Written Off. 84. No other CGT event will happen when the NAB CPS are Written Off. | Cost base of the additional Ordinary Shares: 85. Section 6BA of the ITAA 1936 and Subdivision 130-A of the ITAA 1997 will apply to apportion the first element of the cost base and reduced cost base of each NAB CPS over the converted NAB CPS (being one Ordinary Share in NAB) and any additional Ordinary Shares allotted by NAB as a result of the Conversion of the NAB CPS. | Acquisition time of the additional Ordinary Shares: 86. Under item 1 of the table in subsection 130-20(3), any additional Ordinary Shares acquired by a Holder as part of the Conversion of the NAB CPS will be taken to have been acquired at the time when the NAB CPS were originally acquired by the Holders, being 20 March 2013. | Allotment of the additional Ordinary Shares - dividend: 87. The allotment of any additional Ordinary Shares on the Conversion of the NAB CPS will not constitute a dividend within the meaning of subsection 6(1) of the ITAA 1936, or be taken to be a dividend under subsection 6BA(5) of the ITAA 1936. | The value of the additional Ordinary Shares - ordinary income: 88. The value of any additional Ordinary Shares allotted on the Conversion of the NAB CPS will not be included as ordinary income in the assessable income of any of the Holders under subsection 6-5(1). | Section 45 of the ITAA 1936: 89. Section 45 of the ITAA 1936 will not apply to treat the value of the additional Ordinary Shares allotted to the Holders on the Conversion of the NAB CPS as an unfranked dividend paid by NAB to the Holders. | Section 45A of the ITAA 1936: 90. The Commissioner will not make a determination under subsection 45A(2) of the ITAA 1936 that section 45C of the ITAA 1936 applies to the whole, or any part, of the capital benefit provided to the Holders when the additional Ordinary Shares are allotted to them on the Conversion of the NAB CPS. Therefore, no part of the value of the additional Ordinary Shares will be an unfranked dividend in the hands of the Holders. | Section 45B of the ITAA 1936: 91. The Commissioner will not make a determination under paragraph 45B(3)(b) of the ITAA 1936 that section 45C of the ITAA 1936 applies to the whole, or any part, of the capital benefit provided to the Holders when the additional Ordinary Shares are allotted to them on the Conversion of the NAB CPS. Therefore, no part of the value of the additional Ordinary Shares will be an unfranked dividend in the hands of the Holders. | Amendment of the CPS Terms to substitute an Approved NOHC: 92. CGT event H2 in section 104-155 will happen if the CPS Terms are amended to effect the substitution of an Approved NOHC as the issuer of ordinary shares to the Holders on Conversion of the NAB CPS. 93. However, a Holder will not make a capital gain or a capital loss from CGT event H2 happening as there will be no capital proceeds or incidental costs incurred because of the amendment of the CPS Terms. | Conversion of each NAB CPS and the issue of ordinary shares in an Approved NOHC - CGT implications: 94. Where an Approved NOHC becomes the ultimate holding company of NAB, the Conversion of each NAB CPS and the issue of Approved NOHC ordinary shares to the Holders will result in CGT event C2 happening (section 104-25). This is because it is the conversion of a convertible interest. 95. However, the capital gain or capital loss that a Holder makes from CGT event C2 is disregarded under subsection 130-60(3). For subsection 130-60(3) to apply, this Ruling is made on the basis that the Approved NOHC ordinary shares will be equity interests in the Approved NOHC pursuant to Division 974. | Cost base of the Approved NOHC ordinary shares: 96. Under item 2 of the table in subsection 130-60(1), the first element of the cost base and the reduced cost base of each Approved NOHC ordinary share issued to the Holders will be calculated as the cost base of their NAB CPS at the time of Conversion divided by the number of Approved NOHC ordinary shares they receive for each NAB CPS. | Acquisition time of the Approved NOHC ordinary shares: 97. Under subsection 130-60(2), the Holders will be taken to have acquired the Approved NOHC ordinary shares at the time of the Conversion of the NAB CPS. Commissioner of Taxation 6 March 2013 | Acquisition time of the NAB CPS: 98. Where a company issues or allots equity interests in the company, the equity interests are acquired when the contract is entered into or, if there is no contract, when the equity interests are issued or allotted (item 2 of the table in section 109-10). 99. The NAB CPS are equity interests in NAB. When an investor's application for a certain number of the NAB CPS is accepted by NAB, this leads to the formation of a contract for the allotment of the NAB CPS to the investor (who will become a Holder). Under item 2 of the table in section 109-10, a Holder will acquire their NAB CPS on 20 March 2013, being the date on which the contract for the allotment of the NAB CPS will be entered into. | Cost base and reduced cost base of the NAB CPS: 100. The first element of the cost base and the reduced cost base of a CGT asset includes the money paid, or required to be paid, in respect of acquiring the CGT asset (paragraph 110-25(2)(a) and subsection 110-55(2)). 101. The Issue Price of each NAB CPS is $100. Accordingly, when the NAB CPS are issued, the first element of a Holder's cost base and reduced cost base of each NAB CPS will be $100. | Inclusion of Dividends and franking credits in assessable income: 102. Paragraph 44(1)(a) of the ITAA 1936 provides that the assessable income of a resident shareholder in a company includes dividends that are paid to the shareholder by the company out of profits derived by it from any source. 103. A 'dividend' is defined in subsection 6(1) of the ITAA 1936 to include any distribution made by a company to any of its shareholders, whether in money or other property, but does not include an amount that has been debited against an amount standing to the credit of the company's share capital account. 104. Dividends paid in respect of the NAB CPS will be a distribution of money made by NAB, and will not be sourced, either directly or indirectly, from NAB's share capital account. Therefore, the Dividends are a 'dividend' under the income tax law. Dividends paid in respect of the NAB CPS will be paid out of NAB's profits. Accordingly, the Holders must include all Dividends they receive in respect of their NAB CPS in their assessable income under section 44 of the ITAA 1936. 105. NAB expects that the Dividends paid in respect of the NAB CPS will be franked. 106. Under the Australian imputation system, where an Australian resident company makes a franked distribution directly to a shareholder, the assessable income of the shareholder must also include the amount of the franking credit on the distribution under subsection 207-20(1). The inclusion of both the dividend and the attached franking credit in a shareholder's assessable income is known as 'grossing-up' the dividend. 107. Accordingly, the Holders must include in their assessable income the amount of the franking credit on the Dividends that are received by the Holders. | Entitlement to a tax offset: 108. Under subsection 207-20(2), the Holders are entitled to a tax offset equal to the franking credit on the Dividends. 109. The Holders who are entitled to a franking credit tax offset under subsection 207-20(2) will be subject to the refundable tax offset rules in Division 67, unless specifically excluded under section 67-25. The refundable tax offset rules ensure that certain taxpayers are entitled to a refund, once their available tax offsets have been utilised to reduce any income tax liability to nil. 110. Accordingly, the Holders will be subject to the refundable tax offset rules unless they are a type of entity that is specifically excluded under section 67-25. 111. Entities excluded by section 67-25 include corporate tax entities (such as companies, corporate limited partnerships, corporate unit trusts and public trading trusts), unless they satisfy the requisite conditions in subsections 67-25(1C) or 67-25(1D). | Imputation benefits - streaming: 112. Subdivision 204-D broadly enables the Commissioner to make a determination where distributions with attached imputation benefits are streamed to a member of a corporate tax entity in preference to another member. 113. Section 204-30 prescribes the circumstances that are required to exist before the Commissioner may make such a determination. Section 204-30 applies where a corporate tax entity 'streams' the payment of distributions, or the payment of distributions and the giving of other benefits, to its members in such a way that: 114. Relevantly, if section 204-30 applies, the Commissioner has a discretion under subsection 204-30(3) to make a written determination either: 115. 'Streaming' is not defined for the purposes of section 204-30. However, the Commissioner understands it to refer to a company 'selectively directing the flow of franked distributions to those members who can most benefit from the imputation credits' (paragraph 3.28 of the Explanatory Memorandum to the New Business Tax System (Imputation) Bill 2002). 116. For section 204-30 to apply, members to whom distributions are streamed must derive a greater benefit from franking credits than another member of the entity. The words 'derive a greater benefit from franking credits' are defined in subsection 204-30(8) by reference to the ability of the members to fully utilise imputation benefits. The imputation benefit for resident shareholders is in the form of a tax offset (paragraph 204-30(6)(a)), and for non-resident shareholders is in the form of not being liable to pay dividend withholding tax (paragraph 204-30(6)(e)). The resident shareholders derive a greater benefit from franking credits than the non-resident shareholders. 117. The NAB CPS will be listed on the ASX and hence will be available for investment by different types of investors. NAB expects to pay fully franked dividends in the foreseeable future to all the holders of interests in NAB that are capable of giving rise to frankable distributions, including the Holders, to the extent of the franking credits in its franking account. The dividend payout ratios and franking credits in relation to the Ordinary Shares and other preference share capital of NAB are not expected to change as a result of the issue of the NAB CPS. Accordingly, it cannot be said that NAB will selectively direct the flow of franked distributions to those members who could most benefit from the franking credits. 118. Further, the additional Ordinary Shares allotted on the Conversion of the NAB CPS will not attract the application of section 204-30 because the additional Ordinary Shares will not constitute a 'distribution' (as defined in section 960-120) and the additional Ordinary Shares will not affect NAB's policy of paying fully franked dividends. 119. Based on the information provided, the Commissioner does not conclude that the requisite element of streaming exists in relation to the franked distributions to be paid by NAB to the Holders. Accordingly, based on the information provided, the Commissioner will not make a determination under paragraph 204-30(3)(c) to deny the whole, or any part, of the imputation benefits that are to be received by the Holders in respect of the Dividends paid on the NAB CPS. | Section 177EA of the ITAA 1936: 120. Section 177EA of the ITAA 1936 is a general anti-avoidance provision that applies to a wide range of schemes designed to obtain imputation benefits. In essence, it applies to schemes for the disposition of shares or an interest in shares, where a franked distribution is paid or payable in respect of the shares or an interest in shares. 121. Where section 177EA applies, the Commissioner has a discretion pursuant to subsection 177EA(5) of the ITAA 1936 to make a determination to either: 122. Subsection 177EA(3) of the ITAA 1936 provides that section 177EA of the ITAA 1936 applies if: 123. Under this arrangement, the 'relevant taxpayer' is a Holder of the NAB CPS and the scheme comprises the circumstances surrounding the issue of the NAB CPS to Holders who acquired their NAB CPS by initial application under the Prospectus. 124. In the present case the conditions of paragraphs 177EA(3)(a) to 177EA(3)(d) of the ITAA 1936 are satisfied. 125. Accordingly, the issue is whether, having regard to the relevant circumstances of the scheme, it would be concluded that, on the part of NAB, its shareholders (including the Holders) or any other relevant party who entered into or carried out the scheme or any part of the scheme, there is a purpose (other than an incidental purpose) of enabling the Holders to obtain an imputation benefit. 126. In arriving at a conclusion, the Commissioner must have regard to the relevant circumstances of the scheme which include, but are not limited to, the circumstances set out in subsection 177EA(17) of the ITAA 1936. The relevant circumstances listed there encompass a range of circumstances which, taken individually or collectively, could indicate the requisite purpose. Due to the diverse nature of these circumstances, some may not be present at any one time in any one scheme. 127. NAB has advised that it will issue the NAB CPS as part of its ongoing capital management strategy to support its general corporate business and to provide the NAB Group with Tier 1 capital as required by APRA for capital adequacy purposes. 128. Based on the information provided and the qualifications set out in this Ruling, and having regard to all of the relevant circumstances of the scheme, the Commissioner has concluded that the purpose of enabling the Holders to obtain imputation benefits is not more than incidental to NAB's purpose of raising Tier 1 Capital to meet its capital adequacy requirements. 129. Accordingly, the Commissioner will not make a determination under paragraph 177EA(5)(b) of the ITAA 1936 to deny the whole, or any part, of the imputation benefits that are to be received by the Holders in respect of the Dividends paid on the NAB CPS. | Gross-up and tax offset: 130. Subdivision 207-F creates the appropriate adjustment to cancel the effect of the gross-up and tax offset rules where the entity concerned has manipulated the imputation system in a manner that is not permitted under the income tax law. Section 207-145 is relevant to the Holders that are the subject of this Ruling. 131. Pursuant to subsection 207-145(1), this adjustment will occur where a franked distribution is made to an entity in one or more of the following circumstances: 132. The main test of what constitutes a 'qualified person' in relation to a franked distribution, for the purposes of Division 1A of former Part IIIAA of the ITAA 1936, is known as the holding period rule. This test is in former subsection 160APHO(1) of the ITAA 1936, which states: 133. Former subsection 160APHO(2) of the ITAA 1936, referred to in the preceding paragraph, requires the taxpayer to hold the shares or interest in shares for at least 45 days if the shares are not preference shares, or at least 90 days if the shares are preference shares. 134. As the NAB CPS are 'preference shares' (as defined in the former section 160APHD of the ITAA 1936), a Holder is required to hold the shares on which a dividend has been paid for a continuous period of at least 90 days during the relevant qualification period. 135. In determining whether they hold the shares for at least 90 days during the relevant qualification period, an entity does not count the day on which the shareholder acquired the shares. If the shareholder has disposed of the shares, an entity does not count the day on which the disposal occurred. 136. Furthermore, any days on which the shareholder has materially diminished risks of loss or opportunities for gain in respect of the shares (within the meaning of former sections 160APHM and 160APHJ of the ITAA 1936) are to be excluded. The exclusion of those days is not taken to break the continuity of the period for which the shareholder held the shares. 137. Under former subsection 160APHM(2) of the ITAA 1936, a taxpayer is taken to have materially diminished risks of loss or opportunities for gain in respect of shares if the taxpayer's 'net position' (defined in former subsection 160APHJ(5) of the ITAA 1936) on a particular day in relation to the shares has less than 30% of those risks and opportunities. 138. The requirement to exclude any days on which the shareholder has materially diminished risks of loss or opportunities for gain in respect of shares is often referred to in positive terms as requiring the shareholder to only count the days during the relevant qualification period on which they hold the shares 'at risk'. 139. This Ruling is made on the basis that a Holder or an associate of a Holder has not made, is not under an obligation to make, or is not likely to make, a related payment in respect of any of the Dividends (see subparagraph 72(l) of this Ruling). 140. On the basis that the Holders have not made, nor are under an obligation to make, nor are likely to make, a related payment in respect of any of the Dividends, the relevant qualification period is the primary qualification period pursuant to former paragraph 160APHO(1)(a) of the ITAA 1936. 141. The former section 160APHD of the ITAA 1936 defines the 'primary qualification period' in relation to a taxpayer in relation to shares as: 142. The former subsection 160APHE(1) of the ITAA 1936 defines ' ex dividend' as: 143. The Holders will be capable of each being a 'qualified person' under the former paragraph 160APHO(1)(a) of the ITAA 1936, because this Ruling is made on the basis that (see subparagraphs 72(k) and (m) of this Ruling) that: 144. If a Holder of the NAB CPS is not a 'qualified person' under the former paragraph 160APHO(1)(a) of the ITAA 1936, or other provisions such as former sections 160APHR or 160APHT of the ITAA 1936, the Holder will not be a 'qualified person' for the purposes of Division 1A of former Part IIIAA of the ITAA 1936. Section 207-145 of the ITAA 1997 will create the appropriate adjustment to cancel the effect of the gross-up and tax offset rules for the Holder in relation to payments of some or all of the Dividends. 145. The Commissioner has confirmed that no determination will be made under paragraph 177EA(5)(b) of the ITAA 1936 or paragraph 204-30(3)(c) of the ITAA 1997 to deny the imputation benefits attached to Dividends paid by NAB to the Holders (see paragraphs 78 and 79 of this Ruling). 146. Finally, section 207-145 applies where a distribution is made as part of a dividend stripping operation. A distribution will be taken to be made as part of a dividend stripping operation, pursuant to section 207-155, if the making of the distribution arose out of, or was made in the course of, a scheme that: 147. The Transaction Documents provide no indication that the offering of the NAB CPS and the associated payment of franked Dividends to the Holders constitute a dividend stripping arrangement. 148. Therefore, section 207-145 will not apply to the Dividends received by the Holders in respect of the NAB CPS. Accordingly, section 207-145 will not adjust the Holders' assessable income to exclude the amount of the franking credit on the Dividends, nor will it deny the tax offset to which the Holders would otherwise be entitled. | Qualified person and the Resale facility: 149. In determining whether a shareholder is a 'qualified person' in relation to a dividend paid on their shares, every 'position' (defined in former subsection 160APHJ(2) of the ITAA 1936) in relation to the shares are taken into account in calculating the 'net position'(defined in former subsection 160APHJ(5) of the ITAA 1936) in relation to the shares. The 'net position' determines whether a shareholder has materially diminished risks of loss or opportunities for gain on a particular day in respect of shares held by the shareholder (former section 160APHM of the ITAA 1936). Under former subsection 160APHJ(2) of the ITAA 1936, a 'position' in relation to shares is anything that has a delta in relation to the shares. 150. An embedded share option is a 'position' in relation to a share if it is exercisable by or against a party other than the issuer of the share (Taxation Determination TD 2007/29). 151. Under the Resale facility in clauses 10 and 11 of the CPS Terms, NAB may (subject to certain conditions) elect to require the Holders to sell all or some of their NAB CPS to one or more Nominated Purchasers. Until NAB appoints an entity as a Nominated Purchaser, that entity has no right or ability to call for the NAB CPS from the Holders. 152. NAB is also not required to elect to exercise the Resale facility. It follows that the Resale facility is an option that is held by NAB, the issuer of the NAB CPS, and not by a third party. Therefore, the Resale facility does not constitute a separate 'position' in relation to the NAB CPS under former subsection 160APHJ(2) of the ITAA 1936. 153. For the purpose of determining whether a Holder is a 'qualified person' in relation to the Dividends under Division 1A of former Part IIIAA of the ITAA 1936, the Resale facility, of itself, will not affect a Holder's risks of loss or opportunities for gain in respect of the NAB CPS. | Conversion of each NAB CPS - CGT implications: 154. Under the CPS Terms, the NAB CPS will Convert subject to the satisfaction of the Mandatory Conversion Conditions, or may Convert earlier if NAB elects to do so following the occurrence of certain defined events and subject to the satisfaction of any relevant conditions. 155. If Conversion happens, each NAB CPS that is being Converted will Convert into one Ordinary Share on the Conversion Date, through a variation of the rights attached to the NAB CPS. The Holders will also receive an allotment of an additional number of Ordinary Shares for no additional consideration. 156. Each NAB CPS is a share that is comprised of a bundle of rights. However, those rights are not separate pieces of property capable of being divided out and held separately. Accordingly, the rights attaching to shares do not constitute individual CGT assets as defined by section 108-5, but rather combine to make up one CGT asset, being the share (Taxation Ruling TR 94/30). 157. Under section 104-25, CGT event C2 happens if an entity's ownership of an intangible CGT asset (such as a share) ends by the asset, among other things: 158. The mere variation of the rights attached to the NAB CPS and the allotment of an additional number of Ordinary Shares does not result in a Holder's ownership of the NAB CPS ending by the NAB CPS being redeemed or cancelled for the purposes of paragraph 104-25(1)(a), nor does it result in a Holder's ownership of the NAB CPS ending by the NAB CPS being converted for the purposes of paragraph 104-25(1)(f). Therefore, CGT event C2 will not happen on the Conversion of each NAB CPS. 159. Under section 104-155, CGT event H2 happens if an act, transaction or event occurs in relation to a CGT asset that an entity owns, and the act, transaction or event does not result in an adjustment being made to the asset's cost base or reduced cost base. The receipt of money or other consideration in respect of the variation of the rights attached to a share may cause CGT event H2 to happen (paragraphs 46 - 48 of Taxation Ruling TR 94/30). 160. The Conversion of the NAB CPS includes the allotment of an additional number of Ordinary Shares. This will result in an adjustment to the cost base and reduced cost base of the converted NAB CPS under Subdivision 130-A (see below). 161. Therefore, CGT event H2 will not happen on the Conversion of each NAB CPS. 162. The relinquishment by the Holders of some of the rights attached to the NAB CPS is not a CGT event that happens to part of the CGT asset (which part is, under paragraph 108-5(2)(a), capable of being a CGT asset) comprised by each NAB CPS (see paragraphs 9 and 40 - 42 of Taxation Ruling TR 94/30). 163. No other CGT event in Division 104 will occur as a result of the Conversion of each NAB CPS. | NAB CPS that are Written Off - CGT implications: 164. Under the CPS Terms, if the NAB CPS are Written Off, the NAB CPS will not Convert into Ordinary Shares, and the rights attached to the NAB CPS will be automatically varied (without the express approval of Holders). 165. As stated above in relation to the CGT implications of the Conversion of each NAB CPS, and for the reasons given there, the mere variation of the rights attached to the NAB CPS when the NAB CPS are Written Off will not cause CGT event C2 to happen. 166. Under section 104-155, CGT event H2 happens if an act, transaction or event occurs in relation to a CGT asset that an entity owns, and the act, transaction or event does not result in an adjustment being made to the asset's cost base or reduced cost base. 167. The variation of the rights attached to the NAB CPS when the NAB CPS are Written Off is an act, transaction or event that occurs in relation to the NAB CPS. As the variation of rights will not result in an adjustment to the cost base or reduced cost base of the NAB CPS, CGT event H2 will happen when the NAB CPS are Written Off. 168. A capital gain is made from CGT event H2 if the capital proceeds because of the CGT event are more than the incidental costs incurred that relate to the event. A capital loss is made if the capital proceeds are less than the incidental costs (subsection 104-155(3)). 169. Subsection 116-20(2) provides that the capital proceeds from CGT event H2 are the money or other consideration an entity received, or is entitled to receive, because of the act, transaction or event that is the subject of CGT event H2. 170. There will be no capital proceeds because of CGT event H2 happening as a result of the NAB CPS being Written Off. There will be no incidental costs incurred that relate to the NAB CPS being Written Off. Accordingly, a Holder will not make a capital gain or a capital loss from CGT event H2 happening when the NAB CPS are Written Off. 171. No other CGT event will happen when the NAB CPS are Written Off. | Cost base of the additional Ordinary Shares: 172. Section 6BA of the ITAA 1936 and Subdivision 130-A of the ITAA 1997 will apply to apportion the first element of the cost base and reduced cost base of each NAB CPS over the converted NAB CPS (being one Ordinary Share in NAB) and any additional Ordinary Shares allotted by NAB as a result of the Conversion of the NAB CPS. 173. Section 6BA of the ITAA 1936 applies if a shareholder holds shares in a company (the original shares) and the company issues other shares (the bonus shares) in respect of the original shares. 174. Pursuant to subsection 6BA(3) of the ITAA 1936, as the additional Ordinary Shares allotted by NAB (being the bonus shares for the purposes of section 6BA of the ITAA 1936) are issued to the Holders for no consideration, and are not a dividend or taken to be a dividend (see below), the issue price of the NAB CPS (being the original shares for the purposes of section 6BA of the ITAA 1936) will be apportioned over the converted NAB CPS (being one Ordinary Share in NAB) and any additional Ordinary Shares allotted by NAB as a result of the Conversion of the NAB CPS. 175. Subdivision 130-A applies in a similar manner. It provides special rules relating to the time of acquisition and the cost base of bonus equities for CGT purposes. 176. The operative rule is in section 130-20, which sets out what happens if an entity owns shares in a company (the original equities) and the company issues other shares (the bonus equities) to the entity in relation to the original equities. 177. Under item 1 of the table in subsection 130-20(3), as the additional Ordinary Shares (being the bonus equities for the purposes of Subdivision 130-A) are not a dividend nor taken to be a dividend, the first element of the cost base and reduced cost base of each NAB CPS (being the original equities for the purposes of Subdivision 130-A) will be apportioned over both the converted NAB CPS (being one Ordinary Share in NAB) and any additional Ordinary Shares allotted by NAB as a result of the Conversion of the NAB CPS. | Acquisition time of the additional Ordinary Shares: 178. Under item 1 of the table in subsection 130-20(3), any additional Ordinary Shares acquired by a Holder as part of the Conversion of the NAB CPS will be taken to have been acquired at the time when the NAB CPS were originally acquired by the Holders, being 20 March 2013. | Allotment of the additional Ordinary Shares - dividend: 179. A 'dividend' is defined in subsection 6(1) of the ITAA 1936 to include any distribution made by a company to any of its shareholders, whether in money or other property, and any amount credited by a company to any of its shareholders as shareholders. 180. Although the additional Ordinary Shares allotted by NAB on the Conversion of the NAB CPS will constitute 'property' in the hands of the Holders, the allotment will not be a disposition of property within the ordinary meaning of that expression ( Ord Forrest Pty Ltd v. FC of T (1974) 130 CLR 124; 74 ATC 4034; (1974) 4 ATR 230). As there is no disposition, there cannot be any distribution of property by NAB. 181. The allotment of the additional Ordinary Shares will not constitute a dividend under subsection 6BA(5) of the ITAA 1936 as the CPS Terms do not provide the Holders with a choice of whether to be paid a dividend or to be issued shares. 182. Accordingly, the allotment of any additional Ordinary Shares on the Conversion of the NAB CPS will not constitute a dividend within the meaning of subsection 6(1) of the ITAA 1936, or be taken to be a dividend under subsection 6BA(5) of the ITAA 1936. | The value of the additional Ordinary Shares - ordinary income: 183. The allotment of the additional Ordinary Shares will be an issue of shares for which consideration is not payable. The allotment of the additional Ordinary Shares will result in a re-expression of a Holder's interest in the share capital of NAB. Accordingly, the value of any additional Ordinary Shares allotted on the Conversion of the NAB CPS will not be included as ordinary income in the assessable income of any of the Holders under subsection 6-5(1) ( Commissioner of Taxation v. McNeil (2007) 229 CLR 656; 2007 ATC 4223; (2007) 64 ATR 431). | Section 45 of the ITAA 1936: 184. Section 45 of the ITAA 1936 applies where a company streams the provision of shares and the payment of minimally franked dividends to its shareholders in such a way that the shares are received by some (but not all) shareholders and minimally franked dividends are received by other shareholders. Minimally franked dividends are dividends which are not franked or are franked to less than 10%. 185. NAB has paid fully franked dividends on all of the interests in NAB that are capable of giving rise to frankable distributions for several years. NAB expects to pay fully franked dividends in the foreseeable future to all the holders of interests in NAB that are capable of giving rise to frankable distributions, including the Holders, to the extent of the franking credits in its franking account. 186. Furthermore, the CPS Terms of the NAB CPS do not allow NAB to issue Ordinary Shares to some or all of the Holders as an alternative to the payment of Dividends, nor will there be any link between the allotment of the additional Ordinary Shares and the timing of the payment of any Dividends by NAB. Thus, as there will be no minimally franked dividends, the fact that additional Ordinary Shares will only be allotted to the Holders on the Conversion of the NAB CPS, rather than all of the shareholders of NAB, will not trigger section 45. 187. Therefore, section 45 of the ITAA 1936 will not apply to treat the value of the additional Ordinary Shares allotted to the Holders on the Conversion of the NAB CPS as an unfranked dividend paid by NAB to the Holders. | Section 45A of the ITAA 1936: 188. Section 45A of the ITAA 1936 applies in circumstances where capital benefits are streamed to certain shareholders (the advantaged shareholders) who derive a greater benefit from the capital benefits than other shareholders, and it is reasonable to assume that the other shareholders (the disadvantaged shareholders) have received or will receive dividends. If these conditions are satisfied, the Commissioner can make a determination that all or part of the capital benefit is to be treated as an unfranked dividend, so that it can be included in the assessable income of the advantaged shareholders. 189. The allotment of the additional Ordinary Shares to the Holders on the Conversion of the NAB CPS is the 'provision of a capital benefit' to the Holders (as defined in paragraph 45A(3)(a) of the ITAA 1936). 190. The allotment of the additional Ordinary Shares will be in effect a replacement of the Holders' interest in the share capital of NAB represented by the NAB CPS for ordinary shares in NAB. In the absence of any other factors, the circumstances of the scheme indicate that there will be no streaming of capital benefits to some shareholders. 191. Accordingly, it cannot be said that the Holders will derive a greater benefit from the capital benefits than other NAB shareholders. Therefore, the Commissioner will not make a determination under subsection 45A(2) of the ITAA 1936 that section 45C of the ITAA 1936 applies to the whole, or any part, of the capital benefit provided to the Holders when the additional Ordinary Shares are allotted to them on the Conversion of the NAB CPS. Therefore, no part of the value of the additional Ordinary Shares will be an unfranked dividend in the hands of the Holders. | Section 45B of the ITAA 1936: 192. Section 45B of the ITAA 1936 applies where certain capital benefits are provided to shareholders in substitution for dividends. If applicable, the Commissioner can make a determination that all or part of the capital benefit is to be treated as an unfranked dividend, so that it can be included in the assessable income of the relevant taxpayer. 193. Specifically, section 45B applies where: 194. The arrangement involving the issue of the NAB CPS, including the possible Conversion of the NAB CPS, constitutes a scheme for the purposes of section 45B of the ITAA 1936. 195. The allotment of the additional Ordinary Shares to the Holders on the Conversion of the NAB CPS means that this is a scheme under which the Holders are being provided with a capital benefit (as defined in paragraph 45B(5)(a) of the ITAA 1936) by NAB. Paragraph 45B(2)(a) is satisfied. 196. A taxpayer, who may or may not be the person provided with the capital benefit, must obtain a tax benefit under the scheme. Under subsection 45B(9) of the ITAA 1936, a relevant taxpayer obtains a tax benefit if: by the relevant taxpayer would, apart from the operation of section 45B of the ITAA 1936, if the capital benefit had been an assessable dividend. 197. The relevant taxpayers are the Holders (who also happen to be the persons provided with the capital benefit). The allotment of the additional Ordinary Shares to the Holders on the Conversion of the NAB CPS will not lead to the Holders deriving assessable income or making a capital gain (see paragraphs 83-84 and 89-90). By contrast, an assessable dividend would be included in the assessable income of the Holders. Therefore, the Holders have generally obtained a tax benefit from the scheme. Paragraph 45B(2)(b) is satisfied. 198. For the purposes of paragraph 45B(2)(c) of the ITAA 1936, it must be objectively concluded, having regard to the relevant circumstances of the scheme, that one or more of the persons that entered into or carried out the scheme or any part of the scheme did so for a purpose (other than an incidental purpose) of enabling the relevant taxpayers (the Holders) to obtain a tax benefit. The relevant circumstances of the scheme are listed in subsection 45B(8) of the ITAA 1936. 199. The allotment of the additional Ordinary Shares to the Holders on the Conversion of the NAB CPS will not be in satisfaction of, or an alternative to, the payment of Dividends. Rather, it is a product of the Conversion of the NAB CPS according to the CPS Terms. The quantum of each Holder's interest in the share capital of NAB will not change when a Holder is provided with the capital benefit in the form of the additional Ordinary Shares. Furthermore, NAB has paid fully franked dividends on all of the interests in NAB that are capable of giving rise to frankable distributions for several years, and expects to pay fully franked dividends in the foreseeable future to all the holders of interests in NAB that are capable of giving rise to frankable distributions, including the Holders, to the extent of the franking credits in its franking account. 200. Having regard to the relevant circumstances of the scheme in subsection 45B(8) of the ITAA 1936, and on the basis of the information surrounding the scheme, the Commissioner has concluded that none of the persons who entered into or carried out any part of the scheme did so for a more than incidental purpose of enabling the Holders to obtain a tax benefit. 201. Accordingly, the Commissioner will not make a determination under paragraph 45B(3)(b) of the ITAA 1936 that section 45C of the ITAA 1936 applies to the whole, or any part, of the capital benefit provided to the Holders when the additional Ordinary Shares are allotted to them on the Conversion of the NAB CPS. Therefore, no part of the value of the additional Ordinary Shares will be an unfranked dividend in the hands of the Holders. | Amendment of the CPS Terms to substitute an Approved NOHC: 202. The CPS Terms provide for the possibility of an Approved NOHC becoming the ultimate holding company of NAB. If this occurs, NAB may give a notice to the Holders specifying the amendments that will be made to the CPS Terms so as to ensure that, upon the Conversion of the NAB CPS, ordinary shares in the Approved NOHC will be issued to the Holders instead of NAB Ordinary Shares. 203. Under section 104-155, CGT event H2 happens if an act, transaction or event occurs in relation to a CGT asset that an entity owns, and the act, transaction or event does not result in an adjustment being made to the asset's cost base or reduced cost base. 204. The amendment of the CPS Terms to effect the substitution of an Approved NOHC as the issuer of ordinary shares to the Holders on the Conversion of the NAB CPS would be an act, transaction or event that occurs in relation to the NAB CPS. As the amendment of the CPS Terms would not result in an adjustment to the cost base or reduced cost base of the NAB CPS, CGT event H2 will happen when the CPS Terms are amended. 205. A capital gain is made from CGT event H2 if the capital proceeds because of the CGT event are more than the incidental costs incurred that relate to the event. A capital loss is made if the capital proceeds are less than the incidental costs (subsection 104-155(3)). 206. Subsection 116-20(2) provides that the capital proceeds from CGT event H2 are the money or other consideration an entity received, or is entitled to receive, because of the act, transaction or event that is the subject of CGT event H2. 207. There will be no capital proceeds because of CGT event H2 happening as a result of the amendment of the CPS Terms. There will be no incidental costs incurred that relate to the amendment of the CPS Terms. Accordingly, a Holder will not make a capital gain or a capital loss from CGT event H2 happening on the amendment of the CPS Terms. 208. No other CGT event will happen because of the amendment of the CPS Terms. | Conversion of each NAB CPS and the issue of ordinary shares in an Approved NOHC - CGT implications: 209. Under section 104-25, CGT event C2 happens if an entity's ownership of an intangible CGT asset (such as a share) that is a convertible interest ends by the asset being converted (paragraph 104-25(1)(f)). Each NAB CPS is a convertible interest (see below). If an Approved NOHC becomes the ultimate holding company of NAB, the Conversion of each NAB CPS and the issue of Approved NOHC ordinary shares to the Holders will result in the conversion of a convertible interest, causing CGT event C2 to happen. This is because, on the Conversion Date, the NAB CPS will be transferred by the Holders to the Approved NOHC, and ordinary shares in the Approved NOHC will be issued to the Holders. 210. Subdivision 130-C applies to the acquisition of shares by converting a convertible interest. 211. A 'convertible interest' in a company is defined in subsection 995-1(1) as an interest of the kind referred to in item 4 of the table in subsection 974-75(1). Paragraph (b) of item 4 refers to an interest issued by the company that will, or may, convert into an equity interest in the company or a connected entity of the company. 212. The term 'an interest that will or may convert into another interest' is defined in section 974-165. It includes the scenario where the first interest must be or may be satisfied by the issue of the second interest (subparagraph 974-165(b)(i)). 213. The 'connected entity' of an entity is defined in subsection 995-1(1) of the ITAA 1997 and includes an 'associate' of the entity being examined. 'Associate' is defined in subsection 995-1(1) of the ITAA 1997 to have the meaning given by section 318 of the ITAA 1936. 214. The NAB CPS is an interest that may convert into ordinary shares in the Approved NOHC by the NAB CPS being satisfied by the issue of the Approved NOHC ordinary shares. This Ruling is made on the basis that the Approved NOHC ordinary shares will be equity interests in the Approved NOHC pursuant to Division 974. 215. If an Approved NOHC is the ultimate holding company of NAB at the time of the Conversion of the NAB CPS, the Approved NOHC will be an 'associate' of NAB under section 318 of the ITAA 1936, and thus a connected entity of NAB. 216. Therefore, each NAB CPS is a convertible interest in NAB under paragraph (b) of item 4 of the table in subsection 974-75(1). 217. Accordingly, a capital gain or capital loss that a Holder makes from CGT event C2 happening from converting the convertible interest, where the Conversion of the NAB CPS involves the issue of Approved NOHC ordinary shares to the Holders, is disregarded under subsection 130-60(3). 218. If it transpires that the Approved NOHC ordinary shares are not equity interests in the Approved NOHC pursuant to Division 974, each NAB CPS will not be a convertible interest in NAB. As a result, subsection 130-60(3) would not apply to disregard the capital gain or capital loss that a Holder makes from CGT event C2 happening. | Cost base of the Approved NOHC ordinary shares: 219. Under item 2 of the table in subsection 130-60(1), the first element of the cost base and the reduced cost base of each Approved NOHC ordinary share issued to the Holders will be calculated as the cost base of their NAB CPS at the time of the Conversion divided by the number of Approved NOHC ordinary shares they receive for each NAB CPS. | Acquisition time of the Approved NOHC ordinary shares: 220. Under subsection 130-60(2), the Holders will be taken to have acquired the Approved NOHC ordinary shares at the time of the Conversion of the NAB CPS. This means that when determining a Holder's eligibility to make a discount capital gain from a CGT event happening to the Approved NOHC ordinary shares, the 12 month period will start from the day after the acquisition date of the Approved NOHC ordinary shares (Taxation Determination TD 2002/10) and not from the acquisition date of the NAB CPS. 221. The following is a detailed contents list for this Ruling: Not previously issued as a draft

Ruling: Acquisition time of the NAB CPS: 72. Under item 2 of the table in section 109-10, a Holder will acquire their NAB CPS on 20 March 2013, being the date the contract for the allotment of the NAB CPS was entered into. | Cost base and reduced cost base of the NAB CPS: 73. Under subsections 110-25(2) and 110-55(2), the first element of the cost base and reduced cost base of each NAB CPS will be $100. | Inclusion of Dividends and franking credits in assessable income: 74. The Holders must include in their assessable income all Dividends received in respect of their NAB CPS under subparagraph 44(1)(a)(i) of the ITAA 1936, and the amount of the franking credit on those Dividends under subsection 207-20(1), unless Subdivision 207-D applies. | Entitlement to a tax offset: 75. The Holders are entitled to a tax offset equal to the franking credit on the Dividends under subsection 207-20(2), unless Subdivision 207-D applies. 76. The Holders who are entitled to a franking credit tax offset under Division 207 will be subject to the refundable tax offset rules in Division 67. Certain trustees and corporate tax entities are excluded from the refundable tax offset rules under section 67-25. | Imputation benefits - streaming: 77. The Commissioner will not make a determination under paragraph 204-30(3)(c) to deny the whole, or any part, of the imputation benefits received by the Holders in respect of the Dividends paid on the NAB CPS. | Section 177EA of the ITAA 1936: 78. The Commissioner will not make a determination under paragraph 177EA(5)(b) of the ITAA 1936 to deny the whole, or any part, of the imputation benefits received by the Holders in respect of the Dividends paid on the NAB CPS. | Gross-up and tax offset: 79. Section 207-145 will not apply to the Dividends received by the Holders in respect of the NAB CPS. Accordingly, section 207-145 will not adjust the Holders' assessable income to exclude the amount of the franking credit on the Dividends, nor will it deny the tax offset to which the Holders would otherwise be entitled. | Qualified person and the Resale facility: 80. For the purpose of determining whether a Holder is a 'qualified person' in relation to the Dividends under Division 1A of former Part IIIAA of the ITAA 1936, the Resale facility, of itself, will not affect a Holder's risks of loss or opportunities for gain in respect of the NAB CPS. This is because the Resale facility does not constitute a separate position (former sections 160APHM and 160APHJ of the ITAA 1936). | Conversion of each NAB CPS - CGT implications: 81. The Conversion of each NAB CPS, which consists of the variation of the rights attached to a NAB CPS and the allotment of additional Ordinary Shares, will not result in any CGT event happening. 82. Specifically, CGT event C2 in section 104-25 will not happen upon the Conversion of each NAB CPS. Furthermore, CGT event H2 in section 104-155 will not happen upon the Conversion of each NAB CPS because it includes the allotment of additional Ordinary Shares, which results in an adjustment being made to the cost base and reduced cost base of each NAB CPS. | NAB CPS that are Written Off - CGT implications: 83. CGT event H2 in section 104-155 will happen when the NAB CPS are Written Off. However, a Holder will not make a capital gain or a capital loss from CGT event H2 happening as there will be no capital proceeds or incidental costs incurred because of the NAB CPS being Written Off. 84. No other CGT event will happen when the NAB CPS are Written Off. | Cost base of the additional Ordinary Shares: 85. Section 6BA of the ITAA 1936 and Subdivision 130-A of the ITAA 1997 will apply to apportion the first element of the cost base and reduced cost base of each NAB CPS over the converted NAB CPS (being one Ordinary Share in NAB) and any additional Ordinary Shares allotted by NAB as a result of the Conversion of the NAB CPS. | Acquisition time of the additional Ordinary Shares: 86. Under item 1 of the table in subsection 130-20(3), any additional Ordinary Shares acquired by a Holder as part of the Conversion of the NAB CPS will be taken to have been acquired at the time when the NAB CPS were originally acquired by the Holders, being 20 March 2013. | Allotment of the additional Ordinary Shares - dividend: 87. The allotment of any additional Ordinary Shares on the Conversion of the NAB CPS will not constitute a dividend within the meaning of subsection 6(1) of the ITAA 1936, or be taken to be a dividend under subsection 6BA(5) of the ITAA 1936. | The value of the additional Ordinary Shares - ordinary income: 88. The value of any additional Ordinary Shares allotted on the Conversion of the NAB CPS will not be included as ordinary income in the assessable income of any of the Holders under subsection 6-5(1). | Section 45 of the ITAA 1936: 89. Section 45 of the ITAA 1936 will not apply to treat the value of the additional Ordinary Shares allotted to the Holders on the Conversion of the NAB CPS as an unfranked dividend paid by NAB to the Holders. | Section 45A of the ITAA 1936: 90. The Commissioner will not make a determination under subsection 45A(2) of the ITAA 1936 that section 45C of the ITAA 1936 applies to the whole, or any part, of the capital benefit provided to the Holders when the additional Ordinary Shares are allotted to them on the Conversion of the NAB CPS. Therefore, no part of the value of the additional Ordinary Shares will be an unfranked dividend in the hands of the Holders. | Section 45B of the ITAA 1936: 91. The Commissioner will not make a determination under paragraph 45B(3)(b) of the ITAA 1936 that section 45C of the ITAA 1936 applies to the whole, or any part, of the capital benefit provided to the Holders when the additional Ordinary Shares are allotted to them on the Conversion of the NAB CPS. Therefore, no part of the value of the additional Ordinary Shares will be an unfranked dividend in the hands of the Holders. | Amendment of the CPS Terms to substitute an Approved NOHC: 92. CGT event H2 in section 104-155 will happen if the CPS Terms are amended to effect the substitution of an Approved NOHC as the issuer of ordinary shares to the Holders on Conversion of the NAB CPS. 93. However, a Holder will not make a capital gain or a capital loss from CGT event H2 happening as there will be no capital proceeds or incidental costs incurred because of the amendment of the CPS Terms. | Conversion of each NAB CPS and the issue of ordinary shares in an Approved NOHC - CGT implications: 94. Where an Approved NOHC becomes the ultimate holding company of NAB, the Conversion of each NAB CPS and the issue of Approved NOHC ordinary shares to the Holders will result in CGT event C2 happening (section 104-25). This is because it is the conversion of a convertible interest. 95. However, the capital gain or capital loss that a Holder makes from CGT event C2 is disregarded under subsection 130-60(3). For subsection 130-60(3) to apply, this Ruling is made on the basis that the Approved NOHC ordinary shares will be equity interests in the Approved NOHC pursuant to Division 974. | Cost base of the Approved NOHC ordinary shares: 96. Under item 2 of the table in subsection 130-60(1), the first element of the cost base and the reduced cost base of each Approved NOHC ordinary share issued to the Holders will be calculated as the cost base of their NAB CPS at the time of Conversion divided by the number of Approved NOHC ordinary shares they receive for each NAB CPS. | Acquisition time of the Approved NOHC ordinary shares: 97. Under subsection 130-60(2), the Holders will be taken to have acquired the Approved NOHC ordinary shares at the time of the Conversion of the NAB CPS. Commissioner of Taxation 6 March 2013


Appendix: Acquisition time of the NAB CPS: 98. Where a company issues or allots equity interests in the company, the equity interests are acquired when the contract is entered into or, if there is no contract, when the equity interests are issued or allotted (item 2 of the table in section 109-10). 99. The NAB CPS are equity interests in NAB. When an investor's application for a certain number of the NAB CPS is accepted by NAB, this leads to the formation of a contract for the allotment of the NAB CPS to the investor (who will become a Holder). Under item 2 of the table in section 109-10, a Holder will acquire their NAB CPS on 20 March 2013, being the date on which the contract for the allotment of the NAB CPS will be entered into. | Cost base and reduced cost base of the NAB CPS: 100. The first element of the cost base and the reduced cost base of a CGT asset includes the money paid, or required to be paid, in respect of acquiring the CGT asset (paragraph 110-25(2)(a) and subsection 110-55(2)). 101. The Issue Price of each NAB CPS is $100. Accordingly, when the NAB CPS are issued, the first element of a Holder's cost base and reduced cost base of each NAB CPS will be $100. | Inclusion of Dividends and franking credits in assessable income: 102. Paragraph 44(1)(a) of the ITAA 1936 provides that the assessable income of a resident shareholder in a company includes dividends that are paid to the shareholder by the company out of profits derived by it from any source. 103. A 'dividend' is defined in subsection 6(1) of the ITAA 1936 to include any distribution made by a company to any of its shareholders, whether in money or other property, but does not include an amount that has been debited against an amount standing to the credit of the company's share capital account. 104. Dividends paid in respect of the NAB CPS will be a distribution of money made by NAB, and will not be sourced, either directly or indirectly, from NAB's share capital account. Therefore, the Dividends are a 'dividend' under the income tax law. Dividends paid in respect of the NAB CPS will be paid out of NAB's profits. Accordingly, the Holders must include all Dividends they receive in respect of their NAB CPS in their assessable income under section 44 of the ITAA 1936. 105. NAB expects that the Dividends paid in respect of the NAB CPS will be franked. 106. Under the Australian imputation system, where an Australian resident company makes a franked distribution directly to a shareholder, the assessable income of the shareholder must also include the amount of the franking credit on the distribution under subsection 207-20(1). The inclusion of both the dividend and the attached franking credit in a shareholder's assessable income is known as 'grossing-up' the dividend. 107. Accordingly, the Holders must include in their assessable income the amount of the franking credit on the Dividends that are received by the Holders. | Entitlement to a tax offset: 108. Under subsection 207-20(2), the Holders are entitled to a tax offset equal to the franking credit on the Dividends. 109. The Holders who are entitled to a franking credit tax offset under subsection 207-20(2) will be subject to the refundable tax offset rules in Division 67, unless specifically excluded under section 67-25. The refundable tax offset rules ensure that certain taxpayers are entitled to a refund, once their available tax offsets have been utilised to reduce any income tax liability to nil. 110. Accordingly, the Holders will be subject to the refundable tax offset rules unless they are a type of entity that is specifically excluded under section 67-25. 111. Entities excluded by section 67-25 include corporate tax entities (such as companies, corporate limited partnerships, corporate unit trusts and public trading trusts), unless they satisfy the requisite conditions in subsections 67-25(1C) or 67-25(1D). | Imputation benefits - streaming: 112. Subdivision 204-D broadly enables the Commissioner to make a determination where distributions with attached imputation benefits are streamed to a member of a corporate tax entity in preference to another member. 113. Section 204-30 prescribes the circumstances that are required to exist before the Commissioner may make such a determination. Section 204-30 applies where a corporate tax entity 'streams' the payment of distributions, or the payment of distributions and the giving of other benefits, to its members in such a way that: 114. Relevantly, if section 204-30 applies, the Commissioner has a discretion under subsection 204-30(3) to make a written determination either: 115. 'Streaming' is not defined for the purposes of section 204-30. However, the Commissioner understands it to refer to a company 'selectively directing the flow of franked distributions to those members who can most benefit from the imputation credits' (paragraph 3.28 of the Explanatory Memorandum to the New Business Tax System (Imputation) Bill 2002). 116. For section 204-30 to apply, members to whom distributions are streamed must derive a greater benefit from franking credits than another member of the entity. The words 'derive a greater benefit from franking credits' are defined in subsection 204-30(8) by reference to the ability of the members to fully utilise imputation benefits. The imputation benefit for resident shareholders is in the form of a tax offset (paragraph 204-30(6)(a)), and for non-resident shareholders is in the form of not being liable to pay dividend withholding tax (paragraph 204-30(6)(e)). The resident shareholders derive a greater benefit from franking credits than the non-resident shareholders. 117. The NAB CPS will be listed on the ASX and hence will be available for investment by different types of investors. NAB expects to pay fully franked dividends in the foreseeable future to all the holders of interests in NAB that are capable of giving rise to frankable distributions, including the Holders, to the extent of the franking credits in its franking account. The dividend payout ratios and franking credits in relation to the Ordinary Shares and other preference share capital of NAB are not expected to change as a result of the issue of the NAB CPS. Accordingly, it cannot be said that NAB will selectively direct the flow of franked distributions to those members who could most benefit from the franking credits. 118. Further, the additional Ordinary Shares allotted on the Conversion of the NAB CPS will not attract the application of section 204-30 because the additional Ordinary Shares will not constitute a 'distribution' (as defined in section 960-120) and the additional Ordinary Shares will not affect NAB's policy of paying fully franked dividends. 119. Based on the information provided, the Commissioner does not conclude that the requisite element of streaming exists in relation to the franked distributions to be paid by NAB to the Holders. Accordingly, based on the information provided, the Commissioner will not make a determination under paragraph 204-30(3)(c) to deny the whole, or any part, of the imputation benefits that are to be received by the Holders in respect of the Dividends paid on the NAB CPS. | Section 177EA of the ITAA 1936: 120. Section 177EA of the ITAA 1936 is a general anti-avoidance provision that applies to a wide range of schemes designed to obtain imputation benefits. In essence, it applies to schemes for the disposition of shares or an interest in shares, where a franked distribution is paid or payable in respect of the shares or an interest in shares. 121. Where section 177EA applies, the Commissioner has a discretion pursuant to subsection 177EA(5) of the ITAA 1936 to make a determination to either: 122. Subsection 177EA(3) of the ITAA 1936 provides that section 177EA of the ITAA 1936 applies if: 123. Under this arrangement, the 'relevant taxpayer' is a Holder of the NAB CPS and the scheme comprises the circumstances surrounding the issue of the NAB CPS to Holders who acquired their NAB CPS by initial application under the Prospectus. 124. In the present case the conditions of paragraphs 177EA(3)(a) to 177EA(3)(d) of the ITAA 1936 are satisfied. 125. Accordingly, the issue is whether, having regard to the relevant circumstances of the scheme, it would be concluded that, on the part of NAB, its shareholders (including the Holders) or any other relevant party who entered into or carried out the scheme or any part of the scheme, there is a purpose (other than an incidental purpose) of enabling the Holders to obtain an imputation benefit. 126. In arriving at a conclusion, the Commissioner must have regard to the relevant circumstances of the scheme which include, but are not limited to, the circumstances set out in subsection 177EA(17) of the ITAA 1936. The relevant circumstances listed there encompass a range of circumstances which, taken individually or collectively, could indicate the requisite purpose. Due to the diverse nature of these circumstances, some may not be present at any one time in any one scheme. 127. NAB has advised that it will issue the NAB CPS as part of its ongoing capital management strategy to support its general corporate business and to provide the NAB Group with Tier 1 capital as required by APRA for capital adequacy purposes. 128. Based on the information provided and the qualifications set out in this Ruling, and having regard to all of the relevant circumstances of the scheme, the Commissioner has concluded that the purpose of enabling the Holders to obtain imputation benefits is not more than incidental to NAB's purpose of raising Tier 1 Capital to meet its capital adequacy requirements. 129. Accordingly, the Commissioner will not make a determination under paragraph 177EA(5)(b) of the ITAA 1936 to deny the whole, or any part, of the imputation benefits that are to be received by the Holders in respect of the Dividends paid on the NAB CPS. | Gross-up and tax offset: 130. Subdivision 207-F creates the appropriate adjustment to cancel the effect of the gross-up and tax offset rules where the entity concerned has manipulated the imputation system in a manner that is not permitted under the income tax law. Section 207-145 is relevant to the Holders that are the subject of this Ruling. 131. Pursuant to subsection 207-145(1), this adjustment will occur where a franked distribution is made to an entity in one or more of the following circumstances: 132. The main test of what constitutes a 'qualified person' in relation to a franked distribution, for the purposes of Division 1A of former Part IIIAA of the ITAA 1936, is known as the holding period rule. This test is in former subsection 160APHO(1) of the ITAA 1936, which states: 133. Former subsection 160APHO(2) of the ITAA 1936, referred to in the preceding paragraph, requires the taxpayer to hold the shares or interest in shares for at least 45 days if the shares are not preference shares, or at least 90 days if the shares are preference shares. 134. As the NAB CPS are 'preference shares' (as defined in the former section 160APHD of the ITAA 1936), a Holder is required to hold the shares on which a dividend has been paid for a continuous period of at least 90 days during the relevant qualification period. 135. In determining whether they hold the shares for at least 90 days during the relevant qualification period, an entity does not count the day on which the shareholder acquired the shares. If the shareholder has disposed of the shares, an entity does not count the day on which the disposal occurred. 136. Furthermore, any days on which the shareholder has materially diminished risks of loss or opportunities for gain in respect of the shares (within the meaning of former sections 160APHM and 160APHJ of the ITAA 1936) are to be excluded. The exclusion of those days is not taken to break the continuity of the period for which the shareholder held the shares. 137. Under former subsection 160APHM(2) of the ITAA 1936, a taxpayer is taken to have materially diminished risks of loss or opportunities for gain in respect of shares if the taxpayer's 'net position' (defined in former subsection 160APHJ(5) of the ITAA 1936) on a particular day in relation to the shares has less than 30% of those risks and opportunities. 138. The requirement to exclude any days on which the shareholder has materially diminished risks of loss or opportunities for gain in respect of shares is often referred to in positive terms as requiring the shareholder to only count the days during the relevant qualification period on which they hold the shares 'at risk'. 139. This Ruling is made on the basis that a Holder or an associate of a Holder has not made, is not under an obligation to make, or is not likely to make, a related payment in respect of any of the Dividends (see subparagraph 72(l) of this Ruling). 140. On the basis that the Holders have not made, nor are under an obligation to make, nor are likely to make, a related payment in respect of any of the Dividends, the relevant qualification period is the primary qualification period pursuant to former paragraph 160APHO(1)(a) of the ITAA 1936. 141. The former section 160APHD of the ITAA 1936 defines the 'primary qualification period' in relation to a taxpayer in relation to shares as: 142. The former subsection 160APHE(1) of the ITAA 1936 defines ' ex dividend' as: 143. The Holders will be capable of each being a 'qualified person' under the former paragraph 160APHO(1)(a) of the ITAA 1936, because this Ruling is made on the basis that (see subparagraphs 72(k) and (m) of this Ruling) that: 144. If a Holder of the NAB CPS is not a 'qualified person' under the former paragraph 160APHO(1)(a) of the ITAA 1936, or other provisions such as former sections 160APHR or 160APHT of the ITAA 1936, the Holder will not be a 'qualified person' for the purposes of Division 1A of former Part IIIAA of the ITAA 1936. Section 207-145 of the ITAA 1997 will create the appropriate adjustment to cancel the effect of the gross-up and tax offset rules for the Holder in relation to payments of some or all of the Dividends. 145. The Commissioner has confirmed that no determination will be made under paragraph 177EA(5)(b) of the ITAA 1936 or paragraph 204-30(3)(c) of the ITAA 1997 to deny the imputation benefits attached to Dividends paid by NAB to the Holders (see paragraphs 78 and 79 of this Ruling). 146. Finally, section 207-145 applies where a distribution is made as part of a dividend stripping operation. A distribution will be taken to be made as part of a dividend stripping operation, pursuant to section 207-155, if the making of the distribution arose out of, or was made in the course of, a scheme that: 147. The Transaction Documents provide no indication that the offering of the NAB CPS and the associated payment of franked Dividends to the Holders constitute a dividend stripping arrangement. 148. Therefore, section 207-145 will not apply to the Dividends received by the Holders in respect of the NAB CPS. Accordingly, section 207-145 will not adjust the Holders' assessable income to exclude the amount of the franking credit on the Dividends, nor will it deny the tax offset to which the Holders would otherwise be entitled. | Qualified person and the Resale facility: 149. In determining whether a shareholder is a 'qualified person' in relation to a dividend paid on their shares, every 'position' (defined in former subsection 160APHJ(2) of the ITAA 1936) in relation to the shares are taken into account in calculating the 'net position'(defined in former subsection 160APHJ(5) of the ITAA 1936) in relation to the shares. The 'net position' determines whether a shareholder has materially diminished risks of loss or opportunities for gain on a particular day in respect of shares held by the shareholder (former section 160APHM of the ITAA 1936). Under former subsection 160APHJ(2) of the ITAA 1936, a 'position' in relation to shares is anything that has a delta in relation to the shares. 150. An embedded share option is a 'position' in relation to a share if it is exercisable by or against a party other than the issuer of the share (Taxation Determination TD 2007/29). 151. Under the Resale facility in clauses 10 and 11 of the CPS Terms, NAB may (subject to certain conditions) elect to require the Holders to sell all or some of their NAB CPS to one or more Nominated Purchasers. Until NAB appoints an entity as a Nominated Purchaser, that entity has no right or ability to call for the NAB CPS from the Holders. 152. NAB is also not required to elect to exercise the Resale facility. It follows that the Resale facility is an option that is held by NAB, the issuer of the NAB CPS, and not by a third party. Therefore, the Resale facility does not constitute a separate 'position' in relation to the NAB CPS under former subsection 160APHJ(2) of the ITAA 1936. 153. For the purpose of determining whether a Holder is a 'qualified person' in relation to the Dividends under Division 1A of former Part IIIAA of the ITAA 1936, the Resale facility, of itself, will not affect a Holder's risks of loss or opportunities for gain in respect of the NAB CPS. | Conversion of each NAB CPS - CGT implications: 154. Under the CPS Terms, the NAB CPS will Convert subject to the satisfaction of the Mandatory Conversion Conditions, or may Convert earlier if NAB elects to do so following the occurrence of certain defined events and subject to the satisfaction of any relevant conditions. 155. If Conversion happens, each NAB CPS that is being Converted will Convert into one Ordinary Share on the Conversion Date, through a variation of the rights attached to the NAB CPS. The Holders will also receive an allotment of an additional number of Ordinary Shares for no additional consideration. 156. Each NAB CPS is a share that is comprised of a bundle of rights. However, those rights are not separate pieces of property capable of being divided out and held separately. Accordingly, the rights attaching to shares do not constitute individual CGT assets as defined by section 108-5, but rather combine to make up one CGT asset, being the share (Taxation Ruling TR 94/30). 157. Under section 104-25, CGT event C2 happens if an entity's ownership of an intangible CGT asset (such as a share) ends by the asset, among other things: 158. The mere variation of the rights attached to the NAB CPS and the allotment of an additional number of Ordinary Shares does not result in a Holder's ownership of the NAB CPS ending by the NAB CPS being redeemed or cancelled for the purposes of paragraph 104-25(1)(a), nor does it result in a Holder's ownership of the NAB CPS ending by the NAB CPS being converted for the purposes of paragraph 104-25(1)(f). Therefore, CGT event C2 will not happen on the Conversion of each NAB CPS. 159. Under section 104-155, CGT event H2 happens if an act, transaction or event occurs in relation to a CGT asset that an entity owns, and the act, transaction or event does not result in an adjustment being made to the asset's cost base or reduced cost base. The receipt of money or other consideration in respect of the variation of the rights attached to a share may cause CGT event H2 to happen (paragraphs 46 - 48 of Taxation Ruling TR 94/30). 160. The Conversion of the NAB CPS includes the allotment of an additional number of Ordinary Shares. This will result in an adjustment to the cost base and reduced cost base of the converted NAB CPS under Subdivision 130-A (see below). 161. Therefore, CGT event H2 will not happen on the Conversion of each NAB CPS. 162. The relinquishment by the Holders of some of the rights attached to the NAB CPS is not a CGT event that happens to part of the CGT asset (which part is, under paragraph 108-5(2)(a), capable of being a CGT asset) comprised by each NAB CPS (see paragraphs 9 and 40 - 42 of Taxation Ruling TR 94/30). 163. No other CGT event in Division 104 will occur as a result of the Conversion of each NAB CPS. | NAB CPS that are Written Off - CGT implications: 164. Under the CPS Terms, if the NAB CPS are Written Off, the NAB CPS will not Convert into Ordinary Shares, and the rights attached to the NAB CPS will be automatically varied (without the express approval of Holders). 165. As stated above in relation to the CGT implications of the Conversion of each NAB CPS, and for the reasons given there, the mere variation of the rights attached to the NAB CPS when the NAB CPS are Written Off will not cause CGT event C2 to happen. 166. Under section 104-155, CGT event H2 happens if an act, transaction or event occurs in relation to a CGT asset that an entity owns, and the act, transaction or event does not result in an adjustment being made to the asset's cost base or reduced cost base. 167. The variation of the rights attached to the NAB CPS when the NAB CPS are Written Off is an act, transaction or event that occurs in relation to the NAB CPS. As the variation of rights will not result in an adjustment to the cost base or reduced cost base of the NAB CPS, CGT event H2 will happen when the NAB CPS are Written Off. 168. A capital gain is made from CGT event H2 if the capital proceeds because of the CGT event are more than the incidental costs incurred that relate to the event. A capital loss is made if the capital proceeds are less than the incidental costs (subsection 104-155(3)). 169. Subsection 116-20(2) provides that the capital proceeds from CGT event H2 are the money or other consideration an entity received, or is entitled to receive, because of the act, transaction or event that is the subject of CGT event H2. 170. There will be no capital proceeds because of CGT event H2 happening as a result of the NAB CPS being Written Off. There will be no incidental costs incurred that relate to the NAB CPS being Written Off. Accordingly, a Holder will not make a capital gain or a capital loss from CGT event H2 happening when the NAB CPS are Written Off. 171. No other CGT event will happen when the NAB CPS are Written Off. | Cost base of the additional Ordinary Shares: 172. Section 6BA of the ITAA 1936 and Subdivision 130-A of the ITAA 1997 will apply to apportion the first element of the cost base and reduced cost base of each NAB CPS over the converted NAB CPS (being one Ordinary Share in NAB) and any additional Ordinary Shares allotted by NAB as a result of the Conversion of the NAB CPS. 173. Section 6BA of the ITAA 1936 applies if a shareholder holds shares in a company (the original shares) and the company issues other shares (the bonus shares) in respect of the original shares. 174. Pursuant to subsection 6BA(3) of the ITAA 1936, as the additional Ordinary Shares allotted by NAB (being the bonus shares for the purposes of section 6BA of the ITAA 1936) are issued to the Holders for no consideration, and are not a dividend or taken to be a dividend (see below), the issue price of the NAB CPS (being the original shares for the purposes of section 6BA of the ITAA 1936) will be apportioned over the converted NAB CPS (being one Ordinary Share in NAB) and any additional Ordinary Shares allotted by NAB as a result of the Conversion of the NAB CPS. 175. Subdivision 130-A applies in a similar manner. It provides special rules relating to the time of acquisition and the cost base of bonus equities for CGT purposes. 176. The operative rule is in section 130-20, which sets out what happens if an entity owns shares in a company (the original equities) and the company issues other shares (the bonus equities) to the entity in relation to the original equities. 177. Under item 1 of the table in subsection 130-20(3), as the additional Ordinary Shares (being the bonus equities for the purposes of Subdivision 130-A) are not a dividend nor taken to be a dividend, the first element of the cost base and reduced cost base of each NAB CPS (being the original equities for the purposes of Subdivision 130-A) will be apportioned over both the converted NAB CPS (being one Ordinary Share in NAB) and any additional Ordinary Shares allotted by NAB as a result of the Conversion of the NAB CPS. | Acquisition time of the additional Ordinary Shares: 178. Under item 1 of the table in subsection 130-20(3), any additional Ordinary Shares acquired by a Holder as part of the Conversion of the NAB CPS will be taken to have been acquired at the time when the NAB CPS were originally acquired by the Holders, being 20 March 2013. | Allotment of the additional Ordinary Shares - dividend: 179. A 'dividend' is defined in subsection 6(1) of the ITAA 1936 to include any distribution made by a company to any of its shareholders, whether in money or other property, and any amount credited by a company to any of its shareholders as shareholders. 180. Although the additional Ordinary Shares allotted by NAB on the Conversion of the NAB CPS will constitute 'property' in the hands of the Holders, the allotment will not be a disposition of property within the ordinary meaning of that expression ( Ord Forrest Pty Ltd v. FC of T (1974) 130 CLR 124; 74 ATC 4034; (1974) 4 ATR 230). As there is no disposition, there cannot be any distribution of property by NAB. 181. The allotment of the additional Ordinary Shares will not constitute a dividend under subsection 6BA(5) of the ITAA 1936 as the CPS Terms do not provide the Holders with a choice of whether to be paid a dividend or to be issued shares. 182. Accordingly, the allotment of any additional Ordinary Shares on the Conversion of the NAB CPS will not constitute a dividend within the meaning of subsection 6(1) of the ITAA 1936, or be taken to be a dividend under subsection 6BA(5) of the ITAA 1936. | The value of the additional Ordinary Shares - ordinary income: 183. The allotment of the additional Ordinary Shares will be an issue of shares for which consideration is not payable. The allotment of the additional Ordinary Shares will result in a re-expression of a Holder's interest in the share capital of NAB. Accordingly, the value of any additional Ordinary Shares allotted on the Conversion of the NAB CPS will not be included as ordinary income in the assessable income of any of the Holders under subsection 6-5(1) ( Commissioner of Taxation v. McNeil (2007) 229 CLR 656; 2007 ATC 4223; (2007) 64 ATR 431). | Section 45 of the ITAA 1936: 184. Section 45 of the ITAA 1936 applies where a company streams the provision of shares and the payment of minimally franked dividends to its shareholders in such a way that the shares are received by some (but not all) shareholders and minimally franked dividends are received by other shareholders. Minimally franked dividends are dividends which are not franked or are franked to less than 10%. 185. NAB has paid fully franked dividends on all of the interests in NAB that are capable of giving rise to frankable distributions for several years. NAB expects to pay fully franked dividends in the foreseeable future to all the holders of interests in NAB that are capable of giving rise to frankable distributions, including the Holders, to the extent of the franking credits in its franking account. 186. Furthermore, the CPS Terms of the NAB CPS do not allow NAB to issue Ordinary Shares to some or all of the Holders as an alternative to the payment of Dividends, nor will there be any link between the allotment of the additional Ordinary Shares and the timing of the payment of any Dividends by NAB. Thus, as there will be no minimally franked dividends, the fact that additional Ordinary Shares will only be allotted to the Holders on the Conversion of the NAB CPS, rather than all of the shareholders of NAB, will not trigger section 45. 187. Therefore, section 45 of the ITAA 1936 will not apply to treat the value of the additional Ordinary Shares allotted to the Holders on the Conversion of the NAB CPS as an unfranked dividend paid by NAB to the Holders. | Section 45A of the ITAA 1936: 188. Section 45A of the ITAA 1936 applies in circumstances where capital benefits are streamed to certain shareholders (the advantaged shareholders) who derive a greater benefit from the capital benefits than other shareholders, and it is reasonable to assume that the other shareholders (the disadvantaged shareholders) have received or will receive dividends. If these conditions are satisfied, the Commissioner can make a determination that all or part of the capital benefit is to be treated as an unfranked dividend, so that it can be included in the assessable income of the advantaged shareholders. 189. The allotment of the additional Ordinary Shares to the Holders on the Conversion of the NAB CPS is the 'provision of a capital benefit' to the Holders (as defined in paragraph 45A(3)(a) of the ITAA 1936). 190. The allotment of the additional Ordinary Shares will be in effect a replacement of the Holders' interest in the share capital of NAB represented by the NAB CPS for ordinary shares in NAB. In the absence of any other factors, the circumstances of the scheme indicate that there will be no streaming of capital benefits to some shareholders. 191. Accordingly, it cannot be said that the Holders will derive a greater benefit from the capital benefits than other NAB shareholders. Therefore, the Commissioner will not make a determination under subsection 45A(2) of the ITAA 1936 that section 45C of the ITAA 1936 applies to the whole, or any part, of the capital benefit provided to the Holders when the additional Ordinary Shares are allotted to them on the Conversion of the NAB CPS. Therefore, no part of the value of the additional Ordinary Shares will be an unfranked dividend in the hands of the Holders. | Section 45B of the ITAA 1936: 192. Section 45B of the ITAA 1936 applies where certain capital benefits are provided to shareholders in substitution for dividends. If applicable, the Commissioner can make a determination that all or part of the capital benefit is to be treated as an unfranked dividend, so that it can be included in the assessable income of the relevant taxpayer. 193. Specifically, section 45B applies where: 194. The arrangement involving the issue of the NAB CPS, including the possible Conversion of the NAB CPS, constitutes a scheme for the purposes of section 45B of the ITAA 1936. 195. The allotment of the additional Ordinary Shares to the Holders on the Conversion of the NAB CPS means that this is a scheme under which the Holders are being provided with a capital benefit (as defined in paragraph 45B(5)(a) of the ITAA 1936) by NAB. Paragraph 45B(2)(a) is satisfied. 196. A taxpayer, who may or may not be the person provided with the capital benefit, must obtain a tax benefit under the scheme. Under subsection 45B(9) of the ITAA 1936, a relevant taxpayer obtains a tax benefit if: by the relevant taxpayer would, apart from the operation of section 45B of the ITAA 1936, if the capital benefit had been an assessable dividend. 197. The relevant taxpayers are the Holders (who also happen to be the persons provided with the capital benefit). The allotment of the additional Ordinary Shares to the Holders on the Conversion of the NAB CPS will not lead to the Holders deriving assessable income or making a capital gain (see paragraphs 83-84 and 89-90). By contrast, an assessable dividend would be included in the assessable income of the Holders. Therefore, the Holders have generally obtained a tax benefit from the scheme. Paragraph 45B(2)(b) is satisfied. 198. For the purposes of paragraph 45B(2)(c) of the ITAA 1936, it must be objectively concluded, having regard to the relevant circumstances of the scheme, that one or more of the persons that entered into or carried out the scheme or any part of the scheme did so for a purpose (other than an incidental purpose) of enabling the relevant taxpayers (the Holders) to obtain a tax benefit. The relevant circumstances of the scheme are listed in subsection 45B(8) of the ITAA 1936. 199. The allotment of the additional Ordinary Shares to the Holders on the Conversion of the NAB CPS will not be in satisfaction of, or an alternative to, the payment of Dividends. Rather, it is a product of the Conversion of the NAB CPS according to the CPS Terms. The quantum of each Holder's interest in the share capital of NAB will not change when a Holder is provided with the capital benefit in the form of the additional Ordinary Shares. Furthermore, NAB has paid fully franked dividends on all of the interests in NAB that are capable of giving rise to frankable distributions for several years, and expects to pay fully franked dividends in the foreseeable future to all the holders of interests in NAB that are capable of giving rise to frankable distributions, including the Holders, to the extent of the franking credits in its franking account. 200. Having regard to the relevant circumstances of the scheme in subsection 45B(8) of the ITAA 1936, and on the basis of the information surrounding the scheme, the Commissioner has concluded that none of the persons who entered into or carried out any part of the scheme did so for a more than incidental purpose of enabling the Holders to obtain a tax benefit. 201. Accordingly, the Commissioner will not make a determination under paragraph 45B(3)(b) of the ITAA 1936 that section 45C of the ITAA 1936 applies to the whole, or any part, of the capital benefit provided to the Holders when the additional Ordinary Shares are allotted to them on the Conversion of the NAB CPS. Therefore, no part of the value of the additional Ordinary Shares will be an unfranked dividend in the hands of the Holders. | Amendment of the CPS Terms to substitute an Approved NOHC: 202. The CPS Terms provide for the possibility of an Approved NOHC becoming the ultimate holding company of NAB. If this occurs, NAB may give a notice to the Holders specifying the amendments that will be made to the CPS Terms so as to ensure that, upon the Conversion of the NAB CPS, ordinary shares in the Approved NOHC will be issued to the Holders instead of NAB Ordinary Shares. 203. Under section 104-155, CGT event H2 happens if an act, transaction or event occurs in relation to a CGT asset that an entity owns, and the act, transaction or event does not result in an adjustment being made to the asset's cost base or reduced cost base. 204. The amendment of the CPS Terms to effect the substitution of an Approved NOHC as the issuer of ordinary shares to the Holders on the Conversion of the NAB CPS would be an act, transaction or event that occurs in relation to the NAB CPS. As the amendment of the CPS Terms would not result in an adjustment to the cost base or reduced cost base of the NAB CPS, CGT event H2 will happen when the CPS Terms are amended. 205. A capital gain is made from CGT event H2 if the capital proceeds because of the CGT event are more than the incidental costs incurred that relate to the event. A capital loss is made if the capital proceeds are less than the incidental costs (subsection 104-155(3)). 206. Subsection 116-20(2) provides that the capital proceeds from CGT event H2 are the money or other consideration an entity received, or is entitled to receive, because of the act, transaction or event that is the subject of CGT event H2. 207. There will be no capital proceeds because of CGT event H2 happening as a result of the amendment of the CPS Terms. There will be no incidental costs incurred that relate to the amendment of the CPS Terms. Accordingly, a Holder will not make a capital gain or a capital loss from CGT event H2 happening on the amendment of the CPS Terms. 208. No other CGT event will happen because of the amendment of the CPS Terms. | Conversion of each NAB CPS and the issue of ordinary shares in an Approved NOHC - CGT implications: 209. Under section 104-25, CGT event C2 happens if an entity's ownership of an intangible CGT asset (such as a share) that is a convertible interest ends by the asset being converted (paragraph 104-25(1)(f)). Each NAB CPS is a convertible interest (see below). If an Approved NOHC becomes the ultimate holding company of NAB, the Conversion of each NAB CPS and the issue of Approved NOHC ordinary shares to the Holders will result in the conversion of a convertible interest, causing CGT event C2 to happen. This is because, on the Conversion Date, the NAB CPS will be transferred by the Holders to the Approved NOHC, and ordinary shares in the Approved NOHC will be issued to the Holders. 210. Subdivision 130-C applies to the acquisition of shares by converting a convertible interest. 211. A 'convertible interest' in a company is defined in subsection 995-1(1) as an interest of the kind referred to in item 4 of the table in subsection 974-75(1). Paragraph (b) of item 4 refers to an interest issued by the company that will, or may, convert into an equity interest in the company or a connected entity of the company. 212. The term 'an interest that will or may convert into another interest' is defined in section 974-165. It includes the scenario where the first interest must be or may be satisfied by the issue of the second interest (subparagraph 974-165(b)(i)). 213. The 'connected entity' of an entity is defined in subsection 995-1(1) of the ITAA 1997 and includes an 'associate' of the entity being examined. 'Associate' is defined in subsection 995-1(1) of the ITAA 1997 to have the meaning given by section 318 of the ITAA 1936. 214. The NAB CPS is an interest that may convert into ordinary shares in the Approved NOHC by the NAB CPS being satisfied by the issue of the Approved NOHC ordinary shares. This Ruling is made on the basis that the Approved NOHC ordinary shares will be equity interests in the Approved NOHC pursuant to Division 974. 215. If an Approved NOHC is the ultimate holding company of NAB at the time of the Conversion of the NAB CPS, the Approved NOHC will be an 'associate' of NAB under section 318 of the ITAA 1936, and thus a connected entity of NAB. 216. Therefore, each NAB CPS is a convertible interest in NAB under paragraph (b) of item 4 of the table in subsection 974-75(1). 217. Accordingly, a capital gain or capital loss that a Holder makes from CGT event C2 happening from converting the convertible interest, where the Conversion of the NAB CPS involves the issue of Approved NOHC ordinary shares to the Holders, is disregarded under subsection 130-60(3). 218. If it transpires that the Approved NOHC ordinary shares are not equity interests in the Approved NOHC pursuant to Division 974, each NAB CPS will not be a convertible interest in NAB. As a result, subsection 130-60(3) would not apply to disregard the capital gain or capital loss that a Holder makes from CGT event C2 happening. | Cost base of the Approved NOHC ordinary shares: 219. Under item 2 of the table in subsection 130-60(1), the first element of the cost base and the reduced cost base of each Approved NOHC ordinary share issued to the Holders will be calculated as the cost base of their NAB CPS at the time of the Conversion divided by the number of Approved NOHC ordinary shares they receive for each NAB CPS. | Acquisition time of the Approved NOHC ordinary shares: 220. Under subsection 130-60(2), the Holders will be taken to have acquired the Approved NOHC ordinary shares at the time of the Conversion of the NAB CPS. This means that when determining a Holder's eligibility to make a discount capital gain from a CGT event happening to the Approved NOHC ordinary shares, the 12 month period will start from the day after the acquisition date of the Approved NOHC ordinary shares (Taxation Determination TD 2002/10) and not from the acquisition date of the NAB CPS.


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. | N is the number of days in the Dividend Period. | Margin (expressed as a percentage per annum) means the margin specified in, or determined in accordance with, the Bookbuild. | Tax Rate (expressed as a decimal) means the Australian corporate tax rate applicable to the franking account of NAB on the relevant Dividend Payment Date. | ... (b) if the shares are preference shares - the period beginning on the day after the day on which the taxpayer acquired the shares, and ending on the 90th day after the day on which the shares became ex dividend . | A share in respect of which a dividend is to be paid... becomes ex dividend on the day after the last day on which the acquisition by a person of the share will entitle the person to receive the dividend. | Allotment of the additional Ordinary Shares - dividends | Appendix 2 - Detailed contents list


Related rulings: TR 94/30 TD 2002/10 TR 2006/10 TD 2007/29
Legislative references: ITAA 1936 6(1) ITAA 1936 6BA ITAA 1936 6BA(3) ITAA 1936 6BA(5) ITAA 1936 44 ITAA 1936 44(1)(a) ITAA 1936 45 ITAA 1936 45A ITAA 1936 45A(2) ITAA 1936 45A(3)(a) ITAA 1936 45B ITAA 1936 45B(2)(a) ITAA 1936 45B(2)(b) ITAA 1936 45B(2)(c) ITAA 1936 45B(3)(b) ITAA 1936 45B(5)(a) ITAA 1936 45B(8) ITAA 1936 45B(9) ITAA 1936 45C ITAA 1936 Div IA of former Part IIIAA ITAA 1936 160APHD ITAA 1936 160APHE(1) ITAA 1936 160APHO(1) ITAA 1936 160APHO(1)(a) ITAA 1936 160APHO(2) ITAA 1936 160APHJ ITAA 1936 160APHJ(2) ITAA 1936 160APHJ(5) ITAA 1936 160APHM ITAA 1936 160APHM(2) ITAA 1936 160APHN ITAA 1936 177EA ITAA 1936 177EA(3) ITAA 1936 177EA(3)(a) ITAA 1936 177EA(3)(b) ITAA 1936 177EA(3)(c) ITAA 1936 177EA(3)(d) ITAA 1936 177EA(3)(e) ITAA 1936 177EA(5) ITAA 1936 177EA(5)(a) ITAA 1936 177EA(5)(b) ITAA 1936 177EA(17) ITAA 1936 177EA(17)(f) ITAA 1936 318 ITAA 1997 6-5(1) ITAA 1997 Div 67 ITAA 1997 67-25 ITAA 1997 67-25(1C) ITAA 1997 67-25(1D) ITAA 1997 Div 104 ITAA 1997 104-25 ITAA 1997 104-25(1)(a) ITAA 1997 104-25(1)(f) ITAA 1997 104-155 ITAA 1997 104-155(1) ITAA 1997 104-155(3) ITAA 1997 108-5(2)(a) ITAA 1997 109-10 ITAA 1997 110-25(2) ITAA 1997 110-25(2)(a) ITAA 1997 110-55(2) ITAA 1997 116-20(2) ITAA 1997 Subdiv 130-A ITAA 1997 130-20 ITAA 1997 130-20(3) ITAA 1997 Subdiv 130-C ITAA 1997 130-60(1) ITAA 1997 130-60(2) ITAA 1997 130-60(3) ITAA 1997 Subdiv 204-D ITAA 1997 204-30 ITAA 1997 204-30(1)(a) ITAA 1997 204-30(1)(b) ITAA 1997 204-30(1)(c) ITAA 1997 204-30(3) ITAA 1997 204-30(3)(a) ITAA 1997 204-30(3)(c) ITAA 1997 204-30(6)(a) ITAA 1997 204-30(6)(e) ITAA 1997 204-30(8) ITAA 1997 Div 207 ITAA 1997 207-20 ITAA 1997 207-20(1) ITAA 1997 207-20(2) ITAA 1997 Subdiv 207-F ITAA 1997 207-145 ITAA 1997 207-145(1) ITAA 1997 207-145(1)(a) ITAA 1997 207-145(1)(b) ITAA 1997 207-145(1)(c) ITAA 1997 207-145(1)(d) ITAA 1997 207-155 ITAA 1997 Div 230 ITAA 1997 960-120 ITAA 1997 Div 974 ITAA 1997 974-75(1) ITAA 1997 974-175(1) ITAA 1997 974-165 ITAA 1997 974-165(b)(i) ITAA 1997 995-1(1) Copyright Act 1968 Corporations Act 2001 Taxation Administration Act 1953
Case references: Ord Forrest Pty Ltd v. Federal Commissioner of Taxation (1974) 130 CLR 124 74 ATC 4034 (1974) 4 ATR 230
Subject references: acquisition dates capital gains tax CGT cost base conversion of securities dividend imputation dividend income dividend streaming arrangements franking tax offset preference shares
Other references: Explanatory Memorandum to the New Business Tax System (Imputation) Bill 2002