20 Apr 11 Extension of the Debt/Equity transitional arrangements for Upper Tier 2 Capital Instruments
In media release No 2011/059, issued 20 April 2011, the Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, announced that the Government has extended the debt/equity transitional period for Upper Tier 2 instruments to 1 July 2011.
This follows the creation of the Income Tax Assessment Amendment Regulations 2011 (No 2) (made on 10 March 2011), which facilitate debt tax treatment of certain Upper Tier 2 perpetual subordinated notes. The regulations apply to interest payments made under the relevant notes on or after 1 July 2001.
To come within the scope of the regulations, the terms of the relevant instruments must include a requirement that any deferred interest must accumulate, with or without compounding.
Mr Shorten said that extending the transitional arrangements for Upper Tier 2 instruments will give issuers the opportunity to amend their instruments to enable them to come within the terms of the regulations.