Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p10
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 10/30)
Character Range: 7805360–7808052

obligation
974‑140 Ordinary debt interest
974‑145 Benchmark rate of return
974‑150 Schemes
974‑155 Related schemes
974‑160 Financial benefit
974‑165 Convertible and converting interests

974‑130  Financing arrangement
 (1) A *scheme is a financing arrangement for an entity if it is entered into or undertaken:
 (a) to raise finance for the entity (or a *connected entity of the entity); or
 (b) to fund another scheme, or a part of another scheme, that is a *financing arrangement under paragraph (a); or
 (c) to fund a return, or a part of a return, payable under or provided by or under another scheme, or a part of another scheme, that is a financing arrangement under paragraph (a).
 (2) The following are examples of *schemes that are generally entered into or undertaken to raise finance:
 (a) a bill of exchange;
 (b) income securities;
 (c) a *convertible interest that will convert into an *equity interest.
Note: Paragraph (a) is likely to be relevant for debt interests, paragraph (b) for equity interests and paragraph (c) for both.
 (3) The following are examples of *schemes that are generally not entered into or undertaken to raise finance:
 (a) a derivative that is used solely for managing financial risk;
 (b) a contract for personal services entered into in the ordinary course of a business.
Note: These may be relevant for both debt interests and equity interests.
 (4) For the purposes of subsection (1), the following *schemes are taken not to be entered into or undertaken to raise finance:
 (a) a lease or bailment that satisfies all of the following:
 (i) the property leased or bailed is not property to which Division 16D of Part III of the Income Tax Assessment Act 1936 (arrangements relating to the use of property) applies;
 (ii) the lease or bailment is not a relevant agreement for the purposes of section 128AC of that Act (deemed interest in respect of hire‑purchase and certain other arrangements);
 (iii) the lease or bailment is not an *arrangement to which Division 240 of this Act (about arrangements treated as a sale and loan), or Division 242 of this Act (about luxury car leases), applies;
 (v) the lessee or bailee, or a *connected entity of the lessee or bailee, is not to, and does not have an obligation (whether contingent or not) or a right to, acquire the leased or bailed property;
 (vi) Division 250 of this Act does not apply to a person and the property leased or bailed;
 (b) a securities lending arrangement under section 26BC of the Income Tax Assessment Act 1936;
 (c) a life insurance or general insurance contract undertaken as part of the issuer's ordinary course of business;
 (d) a scheme for the payment of royalties (within