Income Tax (Transitional Provisions) Act 1997

For a capital protected borrowing that:

is an instalment warrant listed on the Australian Stock Exchange; and

contains an explicit put option that permits the underlying investment to be sold for at least the amount borrowed or amount of credit provided and has a separate price that reasonably reflects the market value of that option;

If an amount is incurred:

to acquire the capital protected borrowing in the primary market; or

at a reset date of the borrowing under the capital protected borrowing;

For a capital protected borrowing acquired on the secondary market, the amount that is reasonably attributable to the capital protection for an income year is worked out in accordance with subsection (4) or (5).

If the market value of the underlying security at the time of acquisition is greater than the amount of the borrowing, the amount that is reasonably attributable to the capital protection is:

the sum of the market value of the instalment warrant and the amount of the borrowing or amount of credit provided; less

the sum of the market value of the underlying security and so much of the amount incurred as is attributable to pre‑paid interest.

If the market value of the underlying security at the time of acquisition is equal to or less than the amount of the borrowing or amount of credit provided, the amount that is reasonably attributable to the capital protection is:

the market value of the instalment warrant; less

any pre‑paid interest.

If the amount worked out in accordance with subsection (4) or (5) is less than nil, the amount that is reasonably attributable to the capital protection is nil.