Document ID: chunk:federal_register_of_legislation:C2019C00124:clause:1_1:p24
Version: federal_register_of_legislation:C2019C00124
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 24/27)
Character Range: 65108–67752

working out trust components

Operative provisions

276‑505  Meaning of debt‑like trust instrument
 (1) An instrument that gives rise to an interest in a trust is a debt‑like trust instrument in relation to the trust if:
 (a) the amount of any distribution relating to the interest is fixed, at the time the interest is created, by reference to the amount subscribed for the interest; and
 (b) any distribution relating to the interest is made solely at the discretion of the trustee of the trust; and
 (c) rights to distributions of capital or profits arising from all interests in the trust that are in the same *class as the interest, rank above all such rights arising from other interests in the trust (other than those covered under subsection (2)) if:
 (i) the trust ceases to exist; or
 (ii) where the trust is a *managed investment scheme—the scheme is under administration or is being wound up; and
 (d) in a case where, in relation to a particular period, the trustee of the trust does not make a distribution relating to the interest—making a distribution of any of the following kinds, in relation to that period, is prohibited by the constituent documents of the trust:
 (i) a distribution relating to any membership interest in the trust;
 (ii) a distribution relating to a membership interest in another entity, if that interest is stapled together with a membership interest in the trust.
 (2) This subsection covers an interest in the trust that:
 (a) is not a *membership interest in the trust; or
 (b) satisfies the requirements in paragraphs (1)(a) and (b).

276‑510  Debt‑like trust instruments treated as debt interests etc.
 (1) For the purposes of this Act:
 (a) treat a *debt‑like trust instrument in relation to an *AMIT as a *debt interest in the AMIT; and
 (b) treat a distribution on a debt‑like trust instrument in relation to an AMIT as a cost incurred by the AMIT in relation to a debt interest issued by the AMIT.
 (2) If a trust is an *AMIT for an income year (disregarding this subsection), paragraph (1)(a) applies for the purposes of:
 (a) determining whether the trust is a *managed investment trust in relation to the income year; and
 (b) determining whether the trust is an AMIT for the income year.
 (3) For the purposes of Division 11A of Part III of the Income Tax Assessment Act 1936, if an entity is the holder of a *debt‑like trust instrument in an *AMIT, treat a distribution to the entity in accordance with the instrument as interest.

276‑515  Distribution on debt‑like trust instrument could be deductible in working out trust components
 (1) If an entity is the holder of a *debt‑like trust