• Is the trustee taken to make a payment or a loan?

    If an interposed entity makes a loan to the target entity, then the trustee is taken to have made a loan to the target entity. Similarly, if an interposed entity makes a payment to the target entity, the trustee is taken to make a payment to the target entity, regardless of whether the trustee made an actual loan or payment to the first interposed entity.

    It does not matter whether there is a single interposed entity or multiple interposed entities.

    Example 1

    Berry Pty Ltd has an unpaid present entitlement from Raspberry Trust. Raspberry Trust makes a payment to Strawberry Trust, which then makes a loan to Jane, who is a shareholder of Berry Pty Ltd, as set out in the diagram. The deemed or notional transaction between Raspberry Trust and Jane is treated as a loan because the transaction between Jane and Strawberry Trust is a loan.

    This example is shown below.

    Example 1 diagram.

    It does not matter:

    • whether the interposed entity made the payment or loan to the target entity before, after or at the same time as the first interposed entity received the payment or loan from the trustee
    • whether or not the amount paid or lent to the target entity is the same amount as the trustee paid or lent the first interposed entity.
      Last modified: 15 Jul 2010QC 23183