Section 974-80 ITAA97: The current state of play

Section 974-80, which is part of the debt and equity rules in Div 974 of the Income Tax Assessment Act 1997, is described as an integrity or anti-avoidance measure. Few sections of the Act have created as much consternation as this section. From a seemingly innocuous beginning, s 974-80 morphed from a tightly focused avoidance provision into one with the scope and strength to force the restructure of publicly listed groups. This article provides an overview of the history of s 974-80, including the latest proposal for amendment, describes how the section was used to attack and largely annihilate certain financing structures, and demonstrates the current complexities facing certain stapled groups by stepping through various arguments for and against the operation of s 974-80 to cross-staple loans. The article concludes by looking at the current landscape and the role that the section may continue to play in the foreseeable future.