Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 243 - Limited recourse debt  

Subdivision 243-A - Circumstances in which Division operates  

Operative provisions

SECTION 243-15   When does this Division apply?  

243-15(1)  
This Division applies if:


(a) *limited recourse debt has been used to wholly or partly finance or refinance expenditure; and


(b) at the time that the debt *arrangement is terminated, the debt has not been paid in full by the debtor; and


(c) the debtor can deduct an amount as a *capital allowance for the income year in which the termination occurs, or has deducted or can deduct an amount for an earlier income year, in respect of the expenditure or the *financed property.

Note:

This Division does not apply to certain limited recourse debts that are used to refinance limited recourse debt to which this Division has applied (see subsection 243-50(4) ).

243-15(2)  
However, unless the net *capital allowance deductions have been excessive having regard to the amount of the debt that remains unpaid (see section 243-35 ), no amount is included in the debtor ' s assessable income under this Division although future deductions may be reduced.

243-15(3)  
In working out if the debt has been paid in full, and in working out the unpaid amount of the debt, the following amounts are to be treated as if they were not payments in respect of the debt:


(a) any reduction in the debt as a result of the *financed property being surrendered or returned to the creditor at the termination of the debt;


(b) any payment to reduce the debt that is funded directly or indirectly by *non-arm ' s length limited recourse debt or by proceeds from the disposal of the debtor ' s interest in the financed property.

However, any amounts accrued that are interest, *notional interest or in the nature of interest are taken not to be unpaid.

243-15(4)  
In working out if the debt has been paid in full, and in working out the unpaid amount of the debt, payments are to be attributed first to the payment of any accrued amounts that are interest, *notional interest or in the nature of interest.

243-15(5)  


A notional loan arising because of Division 240 (about arrangements treated as a sale and loan) is taken to be a debt that has been used to wholly or partly finance or refinance expenditure.

 

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