Debt and equity tests: guide to 'at call' loans

About this guide

This guide is designed for tax professionals as well as controlling shareholders, directors and other connected entities of companies who lend money 'at call' to a company. It explains when the debt/equity measures contained in Division 974 of the Income Tax Assessment Act 1997 (ITAA 1997) - 'the debt/equity rules' - apply to 'at call' loans made to a company by a connected entity.

This guide also explains recent government amendments to the operation of the debt/equity rules for companies that satisfy an annual turnover test. This guide will only apply to trusts if the trust is taxed as a company. It is also not intended to apply to 'at call' loans between a resident company and a foreign entity or in situations where an 'at call' loan forms part of a more complex related scheme.