Document ID: chunk:federal_register_of_legislation:C2007A00055:clause:7_2:p1
Version: federal_register_of_legislation:C2007A00055
Segment Type: clause
Provision Reference: sch 7 cl 2 (pt 1/3)
Character Range: 68156–70931

2  Before Part 3‑35
Insert:

Part 3‑10—Financial transactions

Division 247—Interim apportionment methodology for capital protected borrowings

Table of sections

247‑5 Interim apportionment methodology
247‑10 Products listed on the Australian Stock Exchange that have explicit put options
247‑15 Other capital protected products
247‑20 The indicator method
247‑25 The percentage method

247‑5  Interim apportionment methodology

  The methodology set out in this Division must be used to work out how much of an amount that a borrower incurs under or in respect of a capital protected borrowing is reasonably attributable to the capital protection provided under the capital protected borrowing if the capital protected borrowing, or an extension of it, is entered into at or after 9.30 am, by legal time in the Australian Capital Territory, on 16 April 2003 and before 1 July 2007.

Note: To work out how much of such an amount is reasonably attributable to the capital protection provided under a capital protected borrowing entered into on or after 1 July 2007, see Division 247 of the Income Tax Assessment Act 1997.

247‑10  Products listed on the Australian Stock Exchange that have explicit put options

 (1) For a capital protected borrowing that:
 (a) is an instalment warrant listed on the Australian Stock Exchange; and
 (b) contains an explicit put option that permits the underlying investment to be sold for at least the amount borrowed or amount of credit provided and has a separate price that reasonably reflects the market value of that option;
subsection (2) applies.

 (2) If an amount is incurred:
 (a) to acquire the capital protected borrowing in the primary market; or
 (b) at a reset date of the borrowing under the capital protected borrowing;
the amount that is reasonably attributable to the capital protection is the amount specified by the lender under the capital protected borrowing as the cost of the put option.

 (3) For a capital protected borrowing acquired on the secondary market, the amount that is reasonably attributable to the capital protection for an income year is worked out in accordance with subsection (4) or (5).

 (4) If the market value of the underlying security at the time of acquisition is greater than the amount of the borrowing, the amount that is reasonably attributable to the capital protection is:
 (a) the sum of the market value of the instalment warrant and the amount of the borrowing or amount of credit provided; less
 (b) the sum of the market value of the underlying security and so much of the amount incurred as is attributable to pre‑paid interest.

 (5) If the market value of the underlying security at the time of acquisition is equal to or less than the amount of the borrowing or amount of