Interest paid by a company on bearer debentures
126 Interest paid by a company on bearer debentures
If:
a company pays or credits an amount of interest in respect of a debenture payable to bearer; and
the interest is not, to any extent, subject to withholding tax under Division 11A; and
neither of sections 128F (to the extent it applies to non‑residents who are not engaged in carrying on a business in Australia at or through a permanent establishment in Australia) and 128GB applies to the interest; and
the company does not give the Commissioner the name and address of the holder of the debenture;
the company is liable to pay income tax, as imposed by the Income Tax (Bearer Debentures) Act 1971, on the amount paid or credited, or, if the company makes a deduction under subsection (2), the amount that otherwise would have been paid or credited.
Subsection (1) does not affect any other liability of the company to pay income tax.
The company may deduct and retain for its own use from an amount payable to a person in respect of which the company is liable to pay tax in accordance with subsection (1) an amount equal to that tax.
Where the Commissioner is satisfied that that person is not liable to furnish a return, the Commissioner must refund to that person the amount of tax paid by the company in respect of his or her debentures.
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