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INCOME TAX ASSESSMENT ACT 1936 - SECT 82R

Interest on certain convertible notes not to be an allowable deduction

  (1)   Subject to section   82SA, this section applies to a convertible note issued by a company, not being:

  (a)   a convertible note issued on or before 15   November 1960; or

  (b)   a convertible note:

  (i)   the terms of the issue of which were announced by the company on or before that date; or

  (ii)   that the company was, in pursuance of an agreement made on or before that date, bound to issue.

  (2)   Where, in pursuance of the terms upon which any convertible notes were issued by a company, a person was entitled to have a convertible note issued to him or her by that company, the company shall, for the purposes of subsection   (1), be deemed to have issued the convertible note to that person at the time when the person first became entitled to have the convertible note issued to him or her.

  (3)   An outgoing consisting of interest, or a payment in the nature of interest, under a convertible note to which this section applies shall be deemed not to be an allowable deduction from the assessable income of the company.

  (4)   Where a payment has been made by a person (whether under a guarantee or otherwise) that represents, in effect, a payment of interest under a convertible note to which this section applies and the company has incurred an outgoing by way of making good the first - mentioned payment to that person, whether by way of indemnification or otherwise, the amount of that outgoing shall, for the purposes of this section, be deemed to be an outgoing consisting of interest under the convertible note.

  (5)   Section   25 - 25 (Borrowing expenses) of the Income Tax Assessment Act 1997 does not apply to the expenditure incurred by the company in borrowing money by means of convertible notes to which this section applies.


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