are members of the Global Co Division 832 control group. Global Co (which is a resident in Country A) is the ultimate parent entity. Country A imposes tax on foreign source interest payments at a rate greater than 10 per cent. Country B does not impose income tax on any foreign income derived by its residents. Regional Hold Co undertakes a holding company function for the Global Co group for the Asia-Pacific region and has conducted this function since its inception. This function includes holding shares and lending to a number of subsidiaries operating in the Asia-Pacific region, including Aus Co. Regional Hold Co was established prior to its acquisition of Aus Co, which was funded primarily via Regional Hold surplus cash Co’s reserves at the time. Regional Hold Co has employees in Country B who undertake substantial economic activities on behalf of the company and its Board can demonstrate that it undertakes the decision making functions expected of a regional holding company. In this regard, the provision of debt financing by Regional Hold Co to its subsidiaries is part of its ordinary functions as a regional holding company. Therefore, this would indicate that it would not be reasonable to conclude that the scheme, involving the establishment of Regional Hold Co and the funding of Aus Co, was designed to produce the outcomes identified in subsection 832-800(5). When the integrity rule will not apply group — financing function Group Finance Co conducts a function of providing finance (long term and short term) to Global Co group members. It has mixed sources of funding to support its onlending function, including: external debt funding; equity provided from Global Co; and interest bearing loans provided by various group members that have surplus funds. Group Finance Co has employees in Country C with the relevant expertise to carry out its borrowing and on lending functions and can demonstrate that funding used to lend to Aus Co was not effectively funded via a capital injection from Global Co. On balance, these facts regarding Group Finance source of funds Co’s and its ordinary business function would indicate that it would not be reasonable to conclude that the scheme was designed to produce the outcomes identified in subsection 832-800(5).
are members of the Global Co Division 832 control group. Global Co (which is a resident in Country A) is the ultimate parent entity. Country A imposes tax on foreign source interest payments at a rate greater than 10 per cent. Country B does not impose income tax on any foreign income derived by its residents. Regional Hold Co undertakes a holding company function for the Global Co group for the Asia-Pacific region and has conducted this function since its inception. This function includes holding shares and lending to a number of subsidiaries operating in the Asia-Pacific region, including Aus Co. Regional Hold Co was established prior to its acquisition of Aus Co, which was funded primarily via Regional Hold Co’s surplus cash reserves at the time. Regional Hold Co has employees in Country B who undertake substantial economic activities on behalf of the company and its Board can demonstrate that it undertakes the decision making functions expected of a regional holding company. In this regard, the provision of debt financing by Regional Hold Co to its subsidiaries is part of its ordinary functions as a regional holding company. Therefore, this would indicate that it would not be reasonable to conclude that the scheme, involving the establishment of Regional Hold Co and the funding of Aus Co, was designed to produce the outcomes identified in subsection 832-800(5). When the integrity rule will not apply — group financing function Group Finance Co conducts a function of providing finance (long term and short term) to Global Co group members. It has mixed sources of funding to support its onlending function, including: external debt funding; equity provided from Global Co; and interest bearing loans provided by various group members that have surplus funds. Group Finance Co has employees in Country C with the relevant expertise to carry out its borrowing and on lending functions and can demonstrate that funding used to lend to Aus Co was not effectively funded via a capital injection from Global Co. On balance, these facts regarding Group Finance Co’s source of funds and its ordinary business function would indicate that it would not be reasonable to conclude that the scheme was designed to produce the outcomes identified in subsection 832-800(5).
Explanatory-material-c2018-t268551.docx