Commentary on Sections Structure of Chapters Overview Section 559: When disposals involve guaranteed returns
2184.This section explains for the purposes of this Chapter when a disposal involves guaranteed returns. It is based on paragraph 2 of Schedule 5AA to ICTA.
2185.Subsection (1) provides that where the conditions in subsections (2) to (4) are met a disposal will involve guaranteed returns. These conditions are that there must be at least one other related transaction, apart from the disposal giving rise to the charge, and that this, and the related transaction, are intended to produce a guaranteed return. (What is meant by “related transactions” is explained by section 566 (when transactions are related)). The guaranteed return should consist of the return from the disposal in question or a number of disposals of which the disposal in question is one.
2186.Subsection (5) explains the phrase used in the first condition “two or more related transactions designed to produce a guaranteed return”. A “main purpose test” is applied to the two or more related transactions. Considering them together, it must be reasonable to assume that their main purpose or one of their main purposes is to produce that guaranteed return.
2187.Subsection (6) then explains what factors may be considered in making a “reasonable assumption”. These are the same factors as in section 566 (when transactions are related).