Footnotes

Chapter 1 - Introduction

[1]        Review of Business Taxation: a Tax System Redesigned, July 1999.

[2]        Division 974 was introduced into the Income Tax Assessment Act 1997, which essentially defined debt as being 'where an issuer has an effective obligation to return to the investor an amount at least equal to the amount invested'; Explanatory Memorandum (EM), p. 6.

[3]        Divisions 775 and 960-C and 960-D were introduced into the Income Tax Assessment Act 1997.

[4]        The bill introduces a new Division 230 into the Income Tax Assessment Act 1997.

[5]        John Kehoe, 'Complex tax law finally gets legs', Australian Financial Review, 5 December 2008.

[6]        Treasury, Submission 1, p. 1.

Chapter 2 - Taxation of Financial Arrangements

[1]        EM, p. 7.

[2]        Mr Roger Paul, Treasury, Proof Committee Hansard, 16 February 2008, p. 4.

[3]        Losses are deductible 'to the extent that they are made in gaining or producing assessable income or are necessarily made in carrying on a business for the purpose of gaining or producing assessable income, unless otherwise specified', EM, p. 118. This is consistent with the 'nexus provision' of section 8-1 of the Income Tax Assessment Act 1997.

[4]        EM, p. 467.

[5]        The 'fair value' is defined in Australian Accounting Standard AASB 139 as 'the amount for which as asset could be exchanged or a liability settled, between knowledgeable willing parties in arm's length transactions'; EM, p. 226.

[6]        EM, pp 12 and 227.

[7]        The Government recently announced that they intend for derivatives based on carbon permits to be treated as financial arrangements; White Paper on the Carbon Pollution Reduction Scheme, pp 14-21.

[8]        This is a simplification of what is in the bill: the definition of 'financial arrangements' in the EM takes 67 pages!

[9]        There is a cap set on the interest rate on hybrids of 150 basis points above that prevailing on otherwise comparable debt instruments. The cap can be varied by regulation; EM, pp 119-20.

[10]      Cited in Australian Financial Review, 5 December 2008.

[11]      EM, p. 482.

[12]      Institute of Chartered Accountants, Submission 5a.

[13]      Cited in Australian Financial Review, 5 December 2008.

[14]      Cited in Australian Financial Review, 5 December 2008.

[15]      Treasury, Submission 1, p. 2.

[16]      Mr Roger Paul, Treasury, Proof Committee Hansard, 16 February 2008, p. 2.

[17]      EM, p. 409.

[18]      Mr Roger Paul, Treasury, Proof Committee Hansard, 16 February 2008, p. 4.

[19]      Mr Roger Paul, Treasury, Proof Committee Hansard, 16 February 2008, pp 3-4.

[20]      Deloittes, Submission 9, pp 2-5.

[21]      Mr Roger Paul, Treasury, Proof Committee Hansard, 16 February 2008, p. 4.

[22]      PriceWaterhouseCoopers, Submission 2, p. 1.

[23]      Taxation Institute, Submission 3, p. 1; IFSA, Submission 4, p. 1; ICA, Submission 5, p. 1; ABA, Submission 6, p. 1; AFMA, Submission 7, p. 2; Property Council of Australia, Submission 8, p. 1; Deloittes, Submission 9, p. 1.

[24]      Treasury, Submission 1, p. 2; PriceWaterhouseCoopers, Submission 2, pp 1-3; IFSA, Submission 4, p. 2; ICA, Submission 5, p. 1; ABA, Submission 6, p. 1; AFMA, Submission 7, p. 2; Deloittes, Submission 9, p. 1.

[25]      The Hon Chris Bowen MP, House of Representatives Hansard, 11 February 2009, p. 70.

[26]      Mr Anthony Smith MP, House of Representatives Hansard, 11 February 2009, p. 69.

Additional comments by Coalition senators

[1]        The Hon. Peter Dutton MP, Minister for Revenue and Assistant Treasurer, 'Taxation of Financial Arrangements', Press release, no. 117, 20 September 2007.