Income Tax Assessment Act 1997
If this Division applies to you and an asset at a particular time in an income year, a *financial arrangement in the form of a loan (with the characteristics provided for in this section) is taken to exist at that time for the purposes of working out your taxable income for that income year.
See Subdivision 250-E for the taxation treatment of the financial arrangement.Lender 250-155(2)
You are taken to be the lender in relation to the loan. Amount lent and unpaid at the start of the arrangement period 250-155(3)
The amount worked out under subsection (4) is taken to be the amount that you have lent, and that the borrower has not repaid, at the start of the *arrangement period. 250-155(4)
The amount is worked out by taking:
(a) the amount that, at the start of the *arrangement period, is:
(i) the *adjustable value of the asset if subparagraph 250-15(d)(i) applies; or
(ii) the amount worked out under subsection (5) if subparagraph 250-15(d)(ii) applies; or
(b) if section 250-150 applies - the amount that, at the start of the arrangement period, is the *disallowed capital allowance percentage of:
(i) the adjustable value of the asset if subparagraph 250-15(d)(i) applies; or
(ii) the amount worked out under subsection (5) if subparagraph 250-15(d)(ii) applies;
and deducting the sum of all *financial benefits that are *subject to deemed loan treatment and that have become due and payable before the start of the arrangement period.250-155(5)
If subparagraph 250-15(d)(ii) applies, the amount worked out under this subsection for the purposes of subsection (4) is:
|Item||If the expenditure referred to in that subparagraph is ...||the amount is ...|
|1||capital expenditure under Division 40||the amount of the capital expenditure in respect of which a deduction has not been allowed (disregarding this Division) under the relevant Subdivision of Division 40|
|2||capital expenditure under Division 43||the * undeducted construction expenditure in relation to the capital expenditure|
Any *financial benefit that:
(a) a person provides; and
(b) is *subject to deemed loan treatment;
is taken to be an amount that the borrower pays you under the loan.
Section 250-160 tells you which financial benefits are subject to the deemed loan treatment.
These benefits may be ones that are provided either to you or to a connected entity.Period of the loan 250-155(7)
The *arrangement period is taken to be the period of the loan. Applying Subdivision 250-E to the loan 250-155(8)
For the purposes of applying Subdivision 250-E to the loan:
(a) you are taken to have an overall gain from the loan and that overall gain is taken to be sufficiently certain at the time when you start to have the loan; and
(b) the amount of that overall gain is taken to be the sum of the *financial benefits that are *subject to the deemed loan treatment less the amount worked out under subsection (4); and
(c) you are taken:
(i) to start to have the loan at the start of the *arrangement period; and
(ii) to cease to have the loan at the end of the arrangement period; and
(d) any right that you (or a connected entity) have to a financial benefit that is subject to deemed loan treatment is taken to be a right that you have under the loan; and
(e) if a *connected entity transfers to another person a right to a financial benefit subject to deemed loan treatment:
(i) you are taken to transfer the right to that other person; and
(ii) any consideration that the connected entity receives in relation to the transfer is taken to be consideration that you receive in relation to the transfer; and
(f) if a right that a connected entity has to a financial benefit subject to deemed loan treatment ceases and the connected entity receives consideration in relation to that cessation - you are taken to receive that consideration in relation to the cessation; and
(g) you are taken to start to have the loan, or to cease to have the loan, as consideration for something if you start to have the rights to the financial benefits that are subject to deemed loan treatment, or cease to have those rights, as consideration for that thing; and
(h) in applying sections 250-265 to 250-275 :
(i) the amount that you are taken, under subsections (3), (4) and (5), to have lent are the only financial benefits that you provide under the loan; and
(ii) the financial benefits you have received under the loan are taken to include financial benefits that are subject to deemed loan treatment that a person is, at the end of the arrangement period, liable to provide to you.
If, under subsection 250-160(2) , a particular percentage of a reasonable estimate of the *end value of the asset was taken to be a *financial benefit that is *subject to the deemed loan treatment, subsection 250-275(1) applies to the loan at the end of the *arrangement period as if you had received under the loan a financial benefit equal to the relevant percentage of the end value of the asset.
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