Private ruling: Funding agreement
Date of advice: 18 December 2019
Published: March 2020
Ruling period: 1 July 2019 - 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: Q1: 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)? | A1:  | Q2: Will the funds received from Entity A under a funding agreement assessable income under section 15-10 of the ITAA 1997? | A2:  | Q3: Will the funds received from Entity A under a funding agreement assessable income under Subdivision 20-A of the ITAA 1997? | A3: 

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: Summary: 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.