Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p3
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 3/13)
Character Range: 7168511–7171273

by Entity A.
 (4) For the purposes of subsections (2), (3) and (3A), disregard paragraph (b) of the definition of "acquire" in subsection 995‑1(1).

Financial arrangements involving associate pairs
 (5) This subsection applies if all of the following conditions are satisfied:
 (a) an entity (the payer) enters into, or has a *financial arrangement with another entity;
 (b) the payer uses the financial arrangement to:
 (i) fund; or
 (ii) facilitate the funding of;
  one or more payments or distributions, of which one or more is a payment or distribution that, to an extent:
 (iii) the payer makes to an entity (an associate recipient) that is an *associate pair of the payer; and
 (iv) is covered by subsection (5A) (which is about types of payments or distributions);
 (c) the entity mentioned in subsection (1) (the relevant entity) is any of the following:
 (i) the payer;
 (ii) an associate pair of the payer;
 (iii) an associate pair of an associate recipient;
 (d) the relevant entity's *debt deduction mentioned in subsection (1) is, wholly or partly, in relation to the financial arrangement mentioned in paragraph (a) of this subsection;
 (e) the relevant entity's debt deduction is referable to an amount paid or payable, either directly or indirectly, to any of the following:
 (i) an associate pair of the relevant entity;
 (ii) an associate pair of the payer;
 (iii) an associate pair of an associate recipient;
 (f) the relevant entity has not made a choice under subsection 820‑46(4) to use the third party debt test for the income year mentioned in subsection (1) of this section.
 (5A) This subsection covers the following:
 (a) a *dividend, *distribution or *non‑share distribution;
 (b) a distribution by a trustee or partnership;
 (c) a return of capital, including a return of capital made by a distribution or payment made by a trustee or partnership;
 (d) a payment or distribution in respect of the cancellation or redemption of a *membership interest in an entity;
 (e) a *royalty, or a similar payment or distribution for the use of, or right to use, an asset;
 (f) a payment or distribution that is wholly or partly referable to the repayment of principal under a *debt interest if:
 (i) the debt interest is issued by the payer; and
 (ii) the debt interest is a *financial arrangement that satisfies paragraphs (5)(a), (b) and (c);
 (g) a payment or distribution of a kind similar to a payment or distribution mentioned in the preceding paragraphs;
 (h) a payment or distribution prescribed by the regulations.
 (6) For the purposes of paragraph (5)(b):
 (a) the payments or distributions mentioned in that paragraph may be made:
 (i) directly, or indirectly through one or more interposed entities (see subsection (7)); and
 (ii)