Income tax: Offshore Banking Units (OBU) - does the definition of advisory activity in section 121D(7) encompass advising an offshore debt investor in an offshore leveraged lease which has an Australian end-user?

No. Where the advice concerns the making of a particular investment such as a leverage lease, the advice must relate to the kinds of investment referred to in subsection 121D(6) of the Income Tax Assessment Act 1936 - the investment activity provision.

If the leveraged lease involves the leasing of equipment, subsection 121D(6) requires the equipment to be located outside Australia if it is to qualify as an investment activity.

If the advisory work relating to the raising of offshore debt finance for the offshore lessor is part and parcel of the proposed arrangement, and that arrangement involves an Australian end-user, none of the advice qualifies as advisory activity for the purposes of subsection 121D(7).