Issue
If an equity interest in a company is composed of related interests where at least one of the interests is not a share, is the interest a 'non-share equity interest'?
Decision
Yes. Part of the interest is not a share and the interest is therefore a non-share equity interest.
Facts
A company issues an equity interest to raise finance for its business operations.
The equity interest comprises a number of related interests.
At least one of the related interests is not a share.
Reasons for Decision
A 'non-share equity interest' in a company is defined under subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) as 'an equity interest in the company that is not solely a share'.
For the equity interest to be a non-share equity interest, it must be an interest that is not 'solely' a share. The ordinary meaning of the word 'solely' is defined in the Macquarie Dictionary to be - 'as the only one or ones; exclusively or only'.
The equity interest in question is not solely a share because one of the related interests that comprise the equity interest issued by the company is not a share.
Therefore, the equity interest in question is a 'non-share equity interest'.