Income Tax Assessment Act 1997



Division 240 - Arrangements treated as a sale and loan  

Subdivision 240-B - The notional sale and notional loan  

Operative provisions

SECTION 240-25   Notional loan by notional seller to notional buyer  

On entering into the *arrangement, the *notional seller is taken to have made a loan (the notional loan ) to the *notional buyer.

The notional loan is for a period:

(a) starting at the start of the *arrangement; and

(b) ending on the day on which the arrangement is to cease to have effect or, if the arrangement is of indefinite duration, on the day on which it would be reasonable to conclude, having regard to the terms and conditions of the arrangement, that the arrangement will cease to have effect.

The notional loan is of an amount (the notional loan principal ) equal to the consideration for the sale of the property less any amount paid, or credited by the *notional seller as having been paid, by the *notional buyer to the notional seller, at or before the start of the *arrangement, for the cost of the property.


Section 240-80 affects the amount of the notional loan principal where the arrangement is an extension or renewal of another arrangement.


The notional loan is subject to payment of interest.

The consideration for the sale of the property by the *notional seller, and the cost of the acquisition of the property by the *notional buyer, are each taken to have been:

(a) if an amount is stated to be the cost or value of the property for the purposes of the *arrangement and the notional seller and the notional buyer were dealing with each other at *arm's length in connection with the arrangement - the amount so stated; or

(b) otherwise - the amount that could reasonably have been expected to have been paid by the notional buyer for the purchase of the property if:

(i) the notional seller had actually sold the property to the notional buyer at the start of the arrangement; and

(ii) the notional seller and the notional buyer were dealing with each other at arm's length in connection with the sale.


The notional loan principal is taken to be repaid, and the interest is taken to be paid, by the making of the payments under the *arrangement.


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