1 MARCH 2012 NEW ZEALAND GAZETTE, No. 26 763

Mar-23 1-Apr-23 125,787,892.49 534,167.76 534,167.76 6,565,838.50
Apr-23 1-May-23 125,787,892.49 628,939.46 126,416,831.95 519,521.23 1,148,460.69 7,714,299.19
May-23 1-Jun-23 126,416,831.95 536,838.60 536,838.60 8,251,137.79
Jun-23 1-Jul-23 126,416,831.95 519,521.23 519,521.23 8,770,659.02

2023 income year – total expenditure under the financial arrangements rules

Jul-23 1-Aug-23 126,416,831.95 632,084.16 127,048,916.11 538,048.69 1,170,132.85 1,170,132.85
Aug-23 1-Sep-23 127,048,916.11 538,048.69 538,048.69 1,708,181.54
Sep-23 1-Oct-23 127,048,916.11 520,692.28 520,692.28 2,228,873.82
Oct-23 1-Nov-23 127,048,916.11 635,244.58 127,684,160.69 540,738.93 1,175,983.51 3,404,857.33
Nov-23 1-Dec-23 127,684,160.69 523,295.74 523,295.74 3,928,153.07
Dec-23 1-Jan-24 127,684,160.69 540,738.93 540,738.93 4,468,892.00
Jan-24 1-Feb-24 127,684,160.69 638,420.80 128,322,581.49 543,442.63 1,181,863.43 5,650,755.43
Feb-24 1-Mar-24 128,322,581.49 508,381.81 508,381.81 6,159,137.24
Mar-24 1-Apr-24 128,322,581.49 543,442.63 543,442.63 6,702,579.87
Apr-24 1-May-24 128,322,581.49 641,612.91 128,964,194.40 528,541.78 1,170,154.69 7,872,734.56
May-24 1-Jun-24 128,964,194.40 546,159.84 546,159.84 8,418,894.40
Jun-24 1-Jul-24 128,964,194.40 528,541.78 528,541.78 8,947,436.18

2024 income year – total expenditure under the financial arrangements rules

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Special Determination S20: Convertible Redeemable Notes and Preference Shares

This Determination may be cited as “Special Determination S20: Convertible Redeemable Notes and Preference Shares”.

1. Explanation (which does not form part of the Determination)

(1) This Determination relates to convertible redeemable notes (“CRNs”) issued by Company A (“Issuer”) to Company B (“Noteholder”), and to Preference Shares issued by Company C.

(2) The CRNs are perpetual debt securities in respect of which the Noteholder loans funds to the Issuer. Coupon Interest will be paid (in cash) on the Principal Amount of the CRNs until the CRNs are redeemed or converted. The Issuer may redeem the CRNs in cash for the Principal Amount plus the Cash Redemption Premium. Alternatively, the Issuer may convert the CRNs to ordinary shares by issuing Conversion Shares in repayment of the Principal Amount, being a fixed number of ordinary shares in the Issuer.

(3) It was expected at issue that the CRNs would become an expensive form of funding over time, as the Interest Rate increases. As the Cash Redemption Premium increases over time, there is an increasing economic incentive for the Issuer to convert the CRNs to Conversion Shares rather than redeem them for cash.

(4) The Issuer used the Principal Amount to subscribe for Preference Shares in Company C.

(5) An amount (whether it is income, consideration, gain, loss or expenditure) that is solely attributable to an excepted financial arrangement (as described in sections EW 5(2) to EW 5(16) of the Income Tax Act 2007 (“the Act”)) is not taken into account under the financial arrangements rules (in accordance with section EW 6(2) of the Act).

(6) This Determination prescribes a method for determining the part of the consideration receivable by the parties to the arrangement that is solely attributable to the excepted financial arrangements.

2. Reference

(1) This Determination is made pursuant to section 90AC(1)(h) of the Tax Administration Act 1994.

3. Scope of determination

(1) This Determination applies to a wider financial arrangement constituted by:

(a) the CRNs;

(b) the Preference Shares; and

(c) the Conversion Shares.

4. Principle

(1) The CRNs, the Preference Shares and the Conversion Shares are each part of a wider financial arrangement that has “excepted financial arrangement” components as defined in section EW 5 of the Act. The excepted financial arrangements are:

(a) the Preference Shares; and

(b) the Conversion Shares.

(2) The CRNs are a hybrid financial arrangement which have a debt and an equity component. The equity component arises from the option available to the Issuer to issue the Conversion Shares to the Noteholder in lieu of repayment in cash (of the Principal Amount plus the Cash Redemption Premium).

(3) As the CRNs have this dual character, when calculating income or expenditure in relation to the CRNs it is first necessary to separate the debt and equity components of the CRNs. For the purposes of this determination, it is assumed that, if the Issuer issues Conversion Shares to the Noteholder in lieu of payment of the Principal Amount in cash, any difference between the market value of the Conversion Shares and the Principal Amount is solely attributable to the Conversion Shares. Consequently, the difference is solely attributable to an excepted financial arrangement.