Section 23K — Income Tax Assessment Act 1936: Substitution of certain securities

(1) In this section: central borrowing authority means: (a) the New South Wales Treasury Corporation; (b) the Victorian Public Authorities Finance Agency; (c) the Victoria Transport Borrowing Agency; (d) the Queensland Government Development Authority; (e) the Treasurer of the State of Western Australia; (f) the South Australian Government Financing Authority; (g) the Local Government Finance Authority of South Australia; (h) any other public authority of a State, being a public authority that is empowered to issue securities in the manner referred to in paragraph (2)(a). public authority includes a Minister of the Crown in right of a State, a municipal corporation and any other local government body. security means stock, a bond or debenture, or any other document evidencing the indebtedness of a person, whether or not the debt is secured. (2) For the purposes of this section, a person shall be taken to have issued a security (in this subsection referred to as the substituted security) to a taxpayer in substitution for another security (in this subsection referred to as the original security) held by the taxpayer if and only if: (a) the substituted security was issued by the person to the taxpayer in exchange for the surrender or transfer of, or otherwise in replacement or substitution for, the original security; and (b) the terms and conditions provided for by the substituted security were identical in all material respects to those provided for by the original security. (3) Where: (a) but for this subsection, a person would be taken to have issued a security (in this subsection referred to as the substituted security) to a taxpayer in substitution for another security (in this subsection referred to as the original security) held by the taxpayer; and (b) either or both of the following conditions is or are satisfied: (i) an amount was payable by the taxpayer by way of consideration for the issue of the substituted security; or (ii) an amount was payable to the taxpayer by way of consideration for the surrender, transfer, replacement or substitution of the original security; the person shall not be taken for the purposes of this section to have issued the substituted security in substitution for the original security. (4) Where: (a) under terms and conditions provided for by a security, the day on which interest is payable in respect of a period is different from that on which interest is payable in respect of the same period under another security; and (b) the terms and conditions provided for by the securities are otherwise identical in all material respects; the following provisions have effect: (c) if the days on which the interest is payable are separated by an interval not exceeding 31 days—the terms and conditions provided for by the 2 securities shall, for the purposes of paragraph (2)(b), be taken to be identical in all material respects; and (d) in any other case—the terms and conditions provided for by the 2 securities shall, for the purposes of paragraph (2)(b), be taken not to be identical in all material respects. (5) Where, on or after 8 August 1984, a central borrowing authority issued or issues a security (in this subsection referred to as the substituted security) to a taxpayer in substitution for another security (in this subsection referred to as the original security) held by the taxpayer that was issued by a public authority other than the central borrowing authority: (a) the substituted security shall, for the purposes of this Act, be deemed to be a continuation of the original security on the terms and conditions provided for by the substituted security; and (b) no amount shall, in respect of the issue of the substituted security or the surrender, transfer, replacement or substitution of the original security, be included in, allowable as a deduction from or taken into account in ascertaining any amount included in or allowable as a deduction from, the assessable income of any taxpayer in respect of any year of income.