This Ruling, released on Wed 20.6.2012, discusses the operation of s 230-55(4) of the ITAA 1997 in determining whether a number of rights and/or obligations are themselves an arrangement or are 2 or more separate arrangements for the purposes of Div 230.
Broadly, the Ruling states that whether a number of rights and/or obligations are an arrangement or 2 or more separate arrangements is a question of fact and degree that is determined having regard to paras 230-55(4)(a) to (f):
- the nature of the rights and/or obligations;
- their terms and conditions (including those relating to any payment or other consideration for them);
- the circumstances surrounding their creation and their proposed exercise or performance (including what can reasonably be seen as the purposes of one or more of the entities involved);
- whether they can be dealt with separately or must be dealt with together;
- normal commercial understandings and practices in relation to them (including whether they are regarded commercially as separate things or as a group or series that forms a whole); and
- the objects of Div 230.
Therefore, the Ruling indicates that an arrangement for the purposes of Div 230 does not merely depend on the legal form of the arrangement.
Further, the Ruling states that where the taxpayer has an equity interest, s 230-55(4) does not apply as s 230-50(1) applies to provide the equity interest as a financial arrangement.
The Ruling also contains 10 examples to highlight in a number of different circumstances whether the rights and/or obligations are themselves an arrangement or 2 or more arrangements.
DATE OF EFFECT: The Ruling applies to income years commencing both before and after its date of issue.
[LTN 117, 20/6]