Document ID: chunk:federal_register_of_legislation:C2004A00898:clause:1_4:p9
Version: federal_register_of_legislation:C2004A00898
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 9/12)
Character Range: 76093–78975

or effect a non‑contingent obligation (see subsections (3), (4) and (6)) to take that action.

 (2) Without limiting subsection (1), that subsection applies to:
 (a) providing a *financial benefit under the *scheme; or
 (b) terminating the scheme.

 (3) An obligation is non‑contingent if it is not contingent on any event, condition or situation (including the economic performance of the entity having the obligation or a *connected entity of that entity), other than the ability or willingness of that entity or connected entity to meet the obligation.

 (4) The existence of the right of the holder of an *interest that will or may convert into an *equity interest in a company to convert the interest does not of itself make the issuer's obligation to repay the investment not non‑contingent.

 (5) An obligation to redeem a preference share is not contingent merely because there is a legislative requirement for the redemption amount to be met out of profits or a fresh issue of *equity interests.

 (6) In determining whether there is in substance or effect a non‑contingent obligation to take the action, have regard to the artificiality, or the contrived nature, of any contingency on which the obligation to take the action depends.

Note: The artificiality, or the contrived nature, of a contingency would tend to indicate that there is, in substance or effect, a non‑contingent obligation to take that action.

 (7) An obligation of yours is not effectively non‑contingent merely because you will suffer some detrimental practical or commercial consequences if you do not fulfil the obligation.

Note: For example, a contingent obligation to make payments in respect of an income security issued by an approved deposit‑taking institution (ADI) is not effectively non‑contingent merely because of the detrimental effect non‑payment would have on the ADI's business.

 (8) The regulations may make further provisions relating to the following:
 (a) what constitutes a non‑contingent obligation;
 (b) what does not constitute a non‑contingent obligation;
 (c) what constitutes an *effectively non‑contingent obligation;
 (d) what does not constitute an effectively non‑contingent obligation.

974‑140  Ordinary debt interest

 (1) A *debt interest arising from a scheme is an ordinary debt interest if none of the obligations under the scheme is in substance or effect *contingent on the economic performance of:
 (a) the issuer of the interest; or
 (b) a *connected entity; or
 (c) a part of the operations of the issuer or a connected entity.

 (2) The regulations may specify rules for determining whether a *debt interest is an *ordinary debt interest.

974‑145  Benchmark rate of return

 (1) The benchmark rate of return for an interest (the test interest) in an entity is the annually compounded internal rate of return on an *ordinary debt interest that:
 (a) is