Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 250.35

Debt interests

  (1)   Section   250 - 30 does not apply if the * arrangement (either alone or together with any arrangement in relation to the * tax preferred use of the asset or the provision of * financial benefits in relation to the tax preferred use of the asset) is a * debt interest.

  (2)   In applying subsection   (1), disregard subsection   974 - 130(4).

Member of tax preferred sector having certain rights in relation to the asset

  (3)   Section   250 - 30 does not apply if:

  (a)   a * member of the tax preferred sector has:

  (i)   a right, obligation or contingent obligation to purchase or acquire the asset or a legal or equitable interest in the asset; or

  (ii)   a right to require the transfer of the asset or a legal or equitable interest in the asset; or

  (iii)   a residual or reversionary interest in the asset that will arise or become exercisable at or after the end of the * arrangement period; and

  (b)   the consideration for the purchase, acquisition or transfer of the right, obligation or interest is not fixed as the * market value of the asset at the time of the purchase, acquisition or transfer.

To avoid doubt, this subsection does not apply to the asset merely because your interest in the asset is one that ceases to exist after the passage of a particular period of time.

Member of tax preferred sector providing financing

  (4)   Section   250 - 30 does not apply if a * member of the tax preferred sector provides financing, or support for financing, in relation to your interest in the asset (including by way of a loan, a guarantee, an indemnity, a security, hedging or undertaking to provide * financial benefits in the event of the termination of an * arrangement).

Finance leases, non - cancellable operating leases, service concessions and similar arrangements

  (5)   Section   250 - 30 does not apply if an * arrangement in relation to the * tax preferred use of the asset, or the provision of * financial benefits in relation to the tax preferred use of the asset, is or involves:

  (a)   a finance lease; or

  (b)   a non - cancellable operating lease; or

  (c)   a service concession or similar arrangement;

that generally accepted accounting principles, as in force at the start of the * arrangement period, require to be included as an asset or a liability in your balance sheet.

Financial benefits irregular, not based on comparable market - based rates or not reflecting value of tax preferred use of asset

  (6)   Section   250 - 30 does not apply if the * financial benefits that have been, or are to be provided, to you (or a * connected entity) by * members of the tax preferred sector in relation to the * tax preferred use of the asset:

  (a)   are not provided on a regular periodic basis (and at least annually); or

  (b)   are not based on comparable market - based rates; or

  (c)   do not reflect the value of the tax preferred use of the asset.

Special rules if tax preferred use is a lease or hire of the asset

  (7)   If the * tax preferred use of the asset is a lease or hire of the asset (or the use of the asset under a lease or hire arrangement), section   250 - 30 does not apply if:

  (a)   the asset is so specialised that the * end user could not carry out one or more of its functions effectively without the asset; and

  (b)   you would be unlikely to be able to re - lease, re - hire or resell the asset to another person who is not a * member of the tax preferred end user group.

Note:   For particular arrangements that are treated as leases, see section   250 - 80.

Special rules if tax preferred use is not a lease or hire of the asset

  (8)   If the * tax preferred use of the asset is not the lease or hire of the asset (or the use of the asset under a lease or hire arrangement), section   250 - 30 does not apply if:

  (a)   a * member of the tax preferred sector has a right, if particular circumstances occur, to manage, or to assume control over, the asset (other than temporarily for the purpose of ensuring public health or safety, protecting the environment or continuing the supply of an essential service); or

  (b)   the asset is so specialised that it is unlikely that it could effectively be put to any use other than the tax preferred use; or

  (c)   neither you (nor a * connected entity) has effective day to day control and physical possession of the asset.

Note:   For particular arrangements that are treated as leases, see section   250 - 80.