Commonwealth Consolidated Acts Commonwealth Consolidated ActsKinds of OB activity
(1) Each of the following things done by an OBU is an OB activity (offshore banking activity) of the OBU, provided that the requirement relating to the OBU in section 121EA is met:
(a) a borrowing or lending activity described in subsection (2); or
(b) a guarantee‑type activity described in subsection (3); or
(c) a trading activity described in subsection (4); or
(d) an eligible contract activity described in subsection (5); or
(e) an investment activity described in subsection (6), (6A) or (6B); or
(f) an advisory activity described in subsection (7); or
(g) a hedging activity described in subsection (8); or
(h) any other activity involving an offshore person, being an activity declared by regulations for the purposes of this paragraph to be an OB activity.
(2) For the purposes of paragraph (1)(a), a borrowing or lending activity is:
(a) borrowing money from an offshore person where, if that person is a related person or a person to whom paragraph 121E(b) applies and is not an OBU, the money is not Australian currency; or
(b) lending money to an offshore person where, if that person is a person to whom paragraph 121E(b) applies and is not an OBU, the money is not Australian currency; or
(c) borrowing gold from an offshore person; or
(d) lending gold to an offshore person.
Guarantee‑type activity
(3) For the purposes of paragraph (1)(b), a guarantee‑type activity is:
(a) providing a guarantee or letter of credit to an offshore person in relation to activities that are, or will be, conducted wholly outside Australia; or
(b) underwriting a risk for an offshore person in relation to activities that are, or will be, conducted wholly outside Australia in respect of property outside Australia or an event that can only happen outside Australia; or
(c) syndicating a loan for an offshore person; or
(d) issuing a performance bond to an offshore person;
where, if the offshore person is a related person, any money payable under the guarantee, letter, underwriting, loan or bond is not Australian currency.
Trading activity
(4) For the purposes of paragraph (1)(c), a trading activity is:
(a) trading with an offshore person in:
(i) securities issued by non‑residents; or
(ii) eligible contracts, under which any amounts payable are payable by non‑residents; or
(b) trading with an offshore person in:
(i) shares in non‑resident companies; or
(ii) units in non‑resident trusts; or
(c) trading with an offshore person in options or rights in respect of securities, eligible contracts, shares or units referred to in paragraph (a) or (b); or
(d) trading (including on behalf of an offshore person) on the Sydney Futures Exchange in futures contracts, or options contracts, under which any money payable is not Australian currency; or
(e) trading in currency, or options or rights in respect of currency, with any person, where the currency is not Australian currency; or
(ea) trading in currency, or options or rights in respect of currency, with an offshore person; or
(f) trading in gold bullion, or in options or rights in respect of such bullion:
(i) with an offshore person where the money or moneys payable or receivable is or are in any currency; or
(ii) a person other than an offshore person where the money or moneys payable or receivable is or are in a currency other than Australian currency; or
(g) trading with an offshore person in silver, platinum or palladium bullion, or in options or rights in respect of such bullion; or
(h) trading with an offshore person in base metals.
(5) For the purposes of paragraph (1)(d), an eligible contract activity is entering into an eligible contract (other than a loan contract) with an offshore person.
Investment activity
(6) For the purposes of paragraph (1)(e), an investment activity is making (but not managing), as broker or agent for, or trustee for the benefit of, an offshore person to whom paragraph 121E(a) applies, an investment with an offshore person to whom that paragraph applies, where:
(a) the currency in which the investment is made is not Australian currency; and
(b) if the investment involves the purchase of any thing:
(i) if the thing is a share in a company--the company is a non‑resident company; or
(ii) if the thing is a unit in a unit trust--the unit trust is a non‑resident trust; or
(iii) if the thing is land or a building--the land or building is not in Australia; or
(iv) in any other case--the thing is located outside Australia.
Investment activity--portfolio investment
(6A) For the purposes of paragraph (1)(e), an investment activity is also the managing by an OBU of a portfolio investment (see subsection 121DA(1)) for the whole or part (the investment management period ) of a year of income, where:
(a) the portfolio investment is managed as broker, agent or custodian for, or trustee for the benefit of, a non‑resident; and
(b) the portfolio investment was made by the OBU or the non‑resident; and
(c) the portfolio investment was made with a non‑resident (except to the extent that making the investment consisted of making a loan or purchasing an Australian thing); and
(d) the currency in which the portfolio investment was made was not Australian currency; and
(e) if the portfolio investment consists of only a single thing--the thing is not an Australian thing (see subsection 121DA(5)); and
(f) if paragraph (e) does not apply--the average Australian asset percentage (see subsection 121DA(2)) of the portfolio investment is not more than 10%.
Investment activity--portfolio investment for overseas charitable institutions
(6B) For the purposes of paragraph (1)(e), an investment activity is also the managing by an OBU of a portfolio investment (see subsection 121DA(1)) for the whole or part (the investment management period ) of a year of income, where:
(a) the portfolio investment is managed as broker, agent or custodian for, or trustee for the benefit of, an overseas charitable institution; and
(b) the portfolio investment was made by the OBU or the overseas charitable institution.
Advisory activity
(7) For the purposes of paragraph (1)(f), an advisory activity is giving investment or other financial advice to an offshore person where, if the advice is about the making of a particular investment, the investment is of a kind referred to in subsection (6). This does not exclude giving advice about a particular investment of a different kind if doing so is incidental to advising on an investment of a kind referred to in subsection (6), for example for the purpose of comparison or because the investments are commercially related.
Hedging activities
(8) For the purposes of paragraph (1)(g), a hedging activity is entering into a financial arrangement (within the meaning of the Income Tax Assessment Act 1997 ) with an offshore person for the sole purpose of eliminating or reducing the risk of adverse financial consequences that might result to the OBU from:
(a) interest rate exposure of the OBU in respect of borrowing or lending activities (described in subsection (2)) of the OBU; or
(b) currency exposure of the OBU in respect of borrowing or lending activities (described in subsection (2)) of the OBU.
Effect of subsection (8)
(9) Subsection (8) does not limit the scope of any other OB activity of the OBU (for example the trading activity mentioned in paragraph (4)(e)).