18 Jun 09 Non-share distributions on "dollar value" convertible notes & s 177EA - TR 2009/3This final Taxation Ruling was issued on 17 June 2009. It was previously issued in draft form as TD 2007/D16 and TR 2008/D8. Its full title is "Income tax: application of s 177EA of ITAA 1936 to non-share distributions on certain 'dollar value' convertible notes". These notes are classified as non-share equity interests by application of Division 974 of ITAA 1997, essentially because the issuer may choose to convert the notes into ordinary shares that are equity interests in the issuer rather than to repay the issue price. The notes are expected to yield frankable periodic returns that are non-share dividends in the legal form of interest. The Ruling sets out the circumstances in which s 177EA could potentially apply to a scheme for the issue of such convertible notes.
For a copy of TR 2009/3, go here