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Edited version of private advice
Authorisation Number: 1051622047208
Date of advice: 18 December 2019
Ruling
Subject: Funding agreement
Question 1
Will the funds received from Entity A under a funding agreement assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer: No
Question 2
Will the funds received from Entity A under a funding agreement assessable income under section 15-10 of the ITAA 1997?
Answer: No
Question 3
Will the funds received from Entity A under a funding agreement assessable income under Subdivision 20-A of the ITAA 1997?
Answer: No
This ruling applies for the following period:
1 July 2019 - 30 June 2020
The scheme commences on:
1 July 2019
Relevant facts and circumstances
The taxpayer entered into a funding agreement with Entity A for funding in the amount of $xxx to be received by the taxpayer.
Under the funding agreement the taxpayer will repay the full amount of the funding of $xxx to Entity A.
The funding agreement provides that the repayment of the full amount of $xxx is unconditional and is to be made by the taxpayer by a specified date.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 15-10
Income Tax Assessment Act 1997 Subdivision 20-A
Reasons for decision
The funding provided to the taxpayer by Entity A under the funding agreement is a loan, and therefore, is not assessable under section 6-5 or section 15-10 of the ITAA 1997.
As the funding to the taxpayer is a loan, it is not a recoupment or a grant for the purposes of Subdivision 20-A of the ITAA 1997.