Income Tax Act 2007 section 564S

Treatment of bond-holder and bond-issuer

Section 564S clarifies the tax treatment of bond-holders and bond-issuers under alternative finance investment bond arrangements, ensuring that each party's rights, obligations and tax position are clearly defined.

• The bond-holder has no legal or beneficial interest in the underlying bond assets for income tax purposes
• The bond-issuer is not treated as a trustee of the bond assets, and any profits from those assets belong to the bond-issuer in its own right rather than in any fiduciary or representative capacity
• Redemption payments and additional payments made by the bond-issuer are not made in a fiduciary or representative capacity
• The bond-holder cannot claim capital expenditure relief in connection with the bond assets