The government is introducing the new rules as a base maintenance measure without them, it argues, there would be insufficient protection against the revenue loss that could occur if the use of stapled securities were to become widespread. Base maintenance has also been cited as the reason that no consultation was held before the enactment of the new rules was announced. On February 25 2008 the government announced in a short press release that it would be enacting legislation to address a certain type of stapled security arrangement entered into on or after that date. The new rules provide that a debt instrument 'stapled' to an equity instrument, such as a share, will be treated as equity for income tax purposes therefore, no deductions will be available for interest payments.
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