Document ID: chunk:federal_register_of_legislation:C2004A00897:clause:1_22:p4
Version: federal_register_of_legislation:C2004A00897
Segment Type: clause
Provision Reference: sch 1 cl 22 (pt 4/4)
Character Range: 230248–232473

holder of the interest at that time, the interest must be treated as an equity interest at that time.

 (6) Despite subsection (5), the interest must be treated as a debt interest at that time for the purposes of applying that Division to that holder at that time if:
 (a) apart from this section, the interest would be included in the associate entity debt of that holder at that time for those purposes; and
 (b) at that time, the issuer of the interest is not an Australian controlled foreign entity for which that holder is an Australian controller.

820‑40  Transitional provision—transitional equity interests

 (1) This section applies to an interest for the period starting from 1 July 2001 and ending immediately before 1 July 2004 (the transitional period) if:
 (a) the interest was issued before 1 July 2001; and
 (b) disregarding the debt and equity test amendments (within the meaning of Part 4 of Schedule 1 to the New Business Tax System (Debt and Equity) Act 2001), the interest would be:
 (i) an asset of an entity comprised by a debt owed to the entity by the issuer of the interest; or
 (ii) a debt owed by the issuer of the interest to another entity; and
 (c) the interest is an equity interest.

For the issuer

 (2) The interest must be treated as an equity interest at any time during the transitional period for the purposes of applying Division 820 of the Income Tax Assessment Act 1997 to an entity that is the issuer of that interest at that time.

For the holder

 (3) Except as provided by subsection (4), the interest must be treated as a debt interest at any time during the transitional period for the purposes of applying that Division to an entity that is the holder of the interest at that time.

 (4) Despite subsection (3), that interest must be treated as an equity interest at that time for the purposes of applying that Division to that holder at that time if:
 (a) apart from this section, the interest would be included in the associate entity equity of that holder at that time for those purposes; and
 (b) at that time, the issuer of the interest is not an Australian controlled foreign entity for which that holder is an Australian controller.

Part 3—Application provisions