Document ID: chunk:federal_register_of_legislation:C2004A01306:clause:2_128fa:p1
Version: federal_register_of_legislation:C2004A01306
Segment Type: clause
Provision Reference: sch 2 cl 128FA (pt 1/3)
Character Range: 6963–9597

128FA  Division does not apply to interest on certain publicly offered unit trust debentures

Interest to which this section applies

 (1) This section applies to interest paid by the trustee of an eligible unit trust in respect of a debenture issued by the trustee if the issue of the debenture satisfies the public offer test (see subsection (6)).

 (2) If:
 (a) some or all of the transfer price (within the meaning of section 128AA) of a debenture issued by the trustee of an eligible unit trust is taken under that section to be income that consists of interest; and
 (b) the issue of the debenture satisfies the public offer test (see subsection (6));
this section applies to the interest.

Note: Subsection (4) does not apply to the interest because that subsection deals only with interest paid on a debenture by the issuing eligible unit trust.

Tax not payable

 (3) Tax is not payable under this Division in respect of interest to which this section applies.

No exemption for interest paid to certain associates of the issuing trustee

 (4) This section does not apply to interest paid by the trustee of an eligible unit trust to a person in respect of the debenture if, at the time of the payment, the trustee knows, or has reasonable grounds to suspect, that:
 (a) the person is an associate of the trustee; and
 (b) either:
 (i) the associate is a non‑resident and the payment is not received by the associate in respect of a debenture that the associate acquired in carrying on a business in Australia at or through a permanent establishment of the associate in Australia; or
 (ii) the associate is a resident of Australia and the payment is received by the associate in respect of a debenture that the associate acquired in carrying on a business in a country outside Australia at or through a permanent establishment of the associate in that country; and
 (c) the associate does not receive the payment in the capacity of a clearing house, paying agent, custodian, funds manager or responsible entity of a registered scheme.

Debentures issued through certain non‑resident subsidiaries can also get the exemption

 (5) If:
 (a) the trustee of an eligible unit trust holds all of the issued shares in the capital of a company that is not a resident of Australia; and
 (b) the company's only business is raising finance for the purposes of the eligible unit trust; and
 (c) the company raises finance in a country specified in the regulations (but not Australia) by issuing a debenture in that country; and
 (d) when the debenture is issued, the company is treated as a resident of that country for the purposes of