• Is the private company taken to make a payment or a loan?

    If the interposed entity makes a loan to the target entity then the private company is taken to make a loan to the target entity. Similarly, if the interposed entity makes a payment to the target entity, then the private company is taken to make a payment to the target entity.

     

    Example 2

     

    A private company A Pty Ltd enters into an arrangement with an entity X under which A Pty Ltd makes a payment to X and then X makes a loan to Y, a shareholder of A Pty Ltd. A Pty Ltd is taken to have made a loan to Y (the target entity) regardless of the fact that it actually made a payment to X (the interposed entity).

    This example is shown below.

    Example 2 diagram

    Private company taken to have made loan to target entity because interposed entity made loan to target entity.

      Last modified: 21 May 2013QC 17352