Income Tax Act 2007 section 888A

Qualifying private placements

Section 888A exempts interest payments on qualifying private placements from the normal requirement to deduct income tax at source, and gives the Treasury power to set detailed conditions through regulations.

• Interest paid on a qualifying private placement is exempt from the usual duty to deduct income tax at source under section 874
• A qualifying private placement is an unlisted debt security representing a company's loan relationship as debtor, meeting conditions set by Treasury regulations
• The Treasury may specify conditions relating to the security, the debtor company, the lender, the terms of the arrangement, and the person making interest payments
• Regulations may also address the consequences where a payer reasonably but mistakenly believed a security qualified as a private placement