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INCOME TAX ASSESSMENT ACT 1936 - SECT 23K

Substitution of certain securities

             (1)  In this section:

"central borrowing authority" means:

                     (a)  the New South Wales Treasury Corporation;

                     (b)  the Victorian Public Authorities Finance Agency;

                     (c)  the Victoria Transport Borrowing Agency;

                     (d)  the Queensland Government Development Authority;

                     (e)  the Treasurer of the State of Western Australia;

                      (f)  the South Australian Government Financing Authority;

                     (g)  the Local Government Finance Authority of South Australia;

                     (h)  any other public authority of a State, being a public authority that is empowered to issue securities in the manner referred to in paragraph (2)(a).

"public authority" includes a Minister of the Crown in right of a State, a municipal corporation and any other local government body.

"security" means stock, a bond or debenture, or any other document evidencing the indebtedness of a person, whether or not the debt is secured.

             (2)  For the purposes of this section, a person shall be taken to have issued a security (in this subsection referred to as the substituted security ) to a taxpayer in substitution for another security (in this subsection referred to as the original security ) held by the taxpayer if and only if:

                     (a)  the substituted security was issued by the person to the taxpayer in exchange for the surrender or transfer of, or otherwise in replacement or substitution for, the original security; and

                     (b)  the terms and conditions provided for by the substituted security were identical in all material respects to those provided for by the original security.

             (3)  Where:

                     (a)  but for this subsection, a person would be taken to have issued a security (in this subsection referred to as the substituted security ) to a taxpayer in substitution for another security (in this subsection referred to as the original security ) held by the taxpayer; and

                     (b)  either or both of the following conditions is or are satisfied:

                              (i)  an amount was payable by the taxpayer by way of consideration for the issue of the substituted security; or

                             (ii)  an amount was payable to the taxpayer by way of consideration for the surrender, transfer, replacement or substitution of the original security;

the person shall not be taken for the purposes of this section to have issued the substituted security in substitution for the original security.

             (4)  Where:

                     (a)  under terms and conditions provided for by a security, the day on which interest is payable in respect of a period is different from that on which interest is payable in respect of the same period under another security; and

                     (b)  the terms and conditions provided for by the securities are otherwise identical in all material respects;

the following provisions have effect:

                     (c)  if the days on which the interest is payable are separated by an interval not exceeding 31 days--the terms and conditions provided for by the 2 securities shall, for the purposes of paragraph (2)(b), be taken to be identical in all material respects; and

                     (d)  in any other case--the terms and conditions provided for by the 2 securities shall, for the purposes of paragraph (2)(b), be taken not to be identical in all material respects.

             (5)  Where, on or after 8 August 1984, a central borrowing authority issued or issues a security (in this subsection referred to as the substituted security ) to a taxpayer in substitution for another security (in this subsection referred to as the original security ) held by the taxpayer that was issued by a public authority other than the central borrowing authority:

                     (a)  the substituted security shall, for the purposes of this Act, be deemed to be a continuation of the original security on the terms and conditions provided for by the substituted security; and

                     (b)  no amount shall, in respect of the issue of the substituted security or the surrender, transfer, replacement or substitution of the original security, be included in, allowable as a deduction from or taken into account in ascertaining any amount included in or allowable as a deduction from, the assessable income of any taxpayer in respect of any year of income.



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