Income tax: Offshore Banking Units (OBU) - is an OBU entitled to concessional tax treatment for income derived on a success only basis from offshore banking (OB) advisory activities which were entered into prior to the entity being registered as an OBU?

Yes, where the fee income is derived after the entity has been registered as an OBU. [1]

When an entity earns fee income for completing an assignment on a success only basis, the OB income is derived on the date that the assignment was completed and the entity becomes entitled to its fee. Accordingly, income derived after the date of registration of the OBU upon successful completion of an assignment that otherwise qualifies as an OB activity will constitute OB income. This is the case notwithstanding that some work may have been done prior to registration provided that this work itself did not give rise to an entitlement to income.

This situation is different to that described in TD 93/133. The difference between the two cases is in the timing of the derivation of income. A success only basis means that the income is derived upon successful completion of the project - in this case, after the entity is registered as an OBU; whereas, the income derived in TD 93/133 accrues to the entity prior to registration as an OBU.