»Ê¹ÚÌåÓýapp

CTA09/S455C(5) and S698C(5)

»Ê¹ÚÌåÓýapp rules are targeted at arrangements aimed at obtaining a loan-related tax advantage (or derivative-related tax advantage) for any company. In this context, a company obtains a tax advantage if:

• A debit to be brought into account is created or increased;
• A credit does not have to be brought into account or is reduced; or
• A debit or credit is brought into account earlier or later than it otherwise would be.

This anti-avoidance rule is concerned with tax advantages sought by way of the loan relationships or derivative contracts rules. »Ê¹ÚÌåÓýapp definition of a loan-related or derivative-related tax advantage by reference to credits and debits within Part 5 or Part 7 (see S455C(6) and S698C(6)) ensures that the impact of the rules is limited to such cases. Arrangements that seek to obtain a tax advantage not realised by way of Part 5 or Part 7 credits or debits are not within the scope of these provisions.

»Ê¹ÚÌåÓýapp definition of a tax advantage makes no reference to the actual tax payable by a company (or any party) as a result of the arrangements. In deciding whether arrangements give rise to a loan-related or derivative-related tax advantage, it is necessary to consider only the credits and debits brought into account. »Ê¹ÚÌåÓýapp ultimate tax effect is not relevant to that question. It may however be relevant to the question of what adjustments may be appropriate in a particular case, to counteract the tax advantage.

If, for example, a company enters into arrangements which have a main purpose of increasing Part 5 debits that are surrendered to another grouped company, a loan-related tax advantage will arise in the surrendering company, in which debits would be increased, not in the claimant company, which would actually pay less tax. Likewise, if the anti-avoidance rule applied, the counteraction would be to adjust the debits of the surrendering company, which would require an amended group relief claim and surrender.