Income Tax Assessment Act 1997
Subject to subsections (3) and (4), a *financial benefit is subject to deemed loan treatment if:
(a) the financial benefit:
(i) has been; or
(ii) will, assuming normal operating conditions, be; or
provided to you (or a *connected entity); and
(iii) can, assuming normal operating conditions, reasonably be expected to be;
(b) the financial benefit has been, will be or can reasonably be expected to be *provided directly or indirectly by a *member of the tax preferred sector in relation to the *tax preferred use of the asset; and
(c) the right to receive, or the obligation to provide, the financial benefit is *cash settlable; and
(d) the financial benefit has not been, will not be or can be expected not to be provided by one of your connected entities.
Paragraph (d) stops a financial benefit passing between you and any of your connected entities from being counted twice.End value also taken to be financial benefit subject to deemed loan treatment 250-160(2)
The relevant percentage of a reasonable estimate of the *end value of the asset is also taken to be a *financial benefit that is subject to deemed loan treatment if:
(a) the asset is not to be purchased or acquired by, or transferred to, a *member of the tax preferred sector at the end of the *arrangement period under a legally enforceable *arrangement; or
(b) the asset:
(i) is, or is to become, a *privatised asset; or
(ii) would be, or would become, a privatised asset if it were a *depreciating asset; or
(iii) would be a privatised asset if the asset were a depreciating asset and paragraphs 58-5(2)(a) and 58-5(4)(a) were not limited to acquisitions of depreciating assets that occurred on or after 1 July 2001.
The relevant percentage is the *disallowed capital allowance percentage if section 250-150 applies. Otherwise it is 100%.
See section 250-180 for how to work out the end value of the asset.Financial benefits only subject to deemed loan treatment to the extent to which they represent a return on investment 250-160(3)
The *financial benefit is subject to deemed loan treatment only to the extent to which it reasonably represents a return of, or on, an investment in the asset (as distinct, for example, from representing consideration for the provision of services or the recovery of production costs), having regard to:
(a) the *market value of the asset; and
(b) the discount rate applicable under subsection 250-105(2) ; and
(c) your costs in relation to funding your interest in the asset; and
(d) any other relevant matter.
The regulations may provide rules to be applied in determining the extent to which a financial benefit reasonably represents a return of or on an investment in the asset.Only financial benefits provided after Division starts applying to you and the asset 250-160(4)
If the *tax preferred use of the asset starts before this Division starts applying to you and the asset, only *financial benefits provided after this Division starts applying to you and the asset are subject to deemed loan treatment .