The Australian Taxation Office issued for comment Draft Taxation Determination TD 2008/D14, in which a view is expressed that a legally non-enforceable obligation may be an effectively non-contingent obligation for the purposes of the Debt/Equity rules.
The Debt/Equity rules in Division 974 of the Income Tax Assessment Act 1997 determine whether a scheme is a debt interest (return on which is deductible) or equity interest (return on which is frankable). One of …