The ATO on Wed 14.8.2013, issued Product Ruling PR 2013/15 (Tax consequences of investing in equities using the Macquarie Geared Equities Investment plus (2013 Product Brochure)). It applies to entities that enter into the scheme from Wed 14.8.2013, until 30 June 2016. Broadly, the Ruling states that an amount equal to the expense incurred for interest on the Interest Prepayment Loan will be deductible under s 8-1 of the ITAA 1997 and Div 247 of the ITAA 1997 will not apply to the loan.
[FJM Note: Division 247 relates to so called ‘capital protected borrowings’ where the borrower is protected from the market value, of the thing acquired with the borrowings, falling (a form of limited recourse borrowing). The object of the Division is to ensure that the borrower is treated as having paid for an option to ‘put’ the protected acquisition to the lender at the cost price.]
[LTN 156, 14/8/13]