Taxation Determination TD 2011/16
Date of effect: 15 June 2011

What this ruling is about: This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. Ruling 1. Where section 109T of the Income Tax Assessment Act 1936 (ITAA 1936) [1] operates to treat a private company as having made a payment or loan to a shareholder (the target entity) [2] , in determining the amount of that deemed payment or notional loan under section 109V or 109W, the Commissioner will take into account relevant factors occurring before the earlier of the due date for lodgment and the date of lodgment (lodgment date) of the private company's return for the income year in which the company is taken to have made the deemed payment or notional loan. The Commissioner will also take account of any relevant factors occurring after that date that are within the Commissioner's knowledge at the time of making a determination. 2. The relevant factors that the Commissioner will take into account include: 3. For the purpose of paragraph 2(h) of this Determination, in determining whether the factors reflect genuine transactions the Commissioner will take into account related facts and circumstances within the Commissioner's knowledge at the time the Commissioner determines the amount of the deemed payment and notional loan. Examples of arrangements designed to avoid the application of Subdivision E otherwise than as envisaged within the scheme of Division 7A include loans to interposed entities entered into on section 109N compliant terms in respect which: 4. The following examples are illustrations of the way in which the above principles are applied. The determination of the amount of any deemed payment or notional loan depends on the circumstances of the particular case. Consequently the answers given in the following examples are not determinative of our views on cases with similar, but different, facts. Example 1 5. The Jones family conduct their business and investment activities through a number of corporate and trust entities. 6. On 15 September 2010 Jones Pty Ltd makes a loan of $120,000 to Jones Holding Co Pty Ltd as trustee for the Jones Family Trust. This loan does not comply with the requirements of section 109N at the time the loan is made as the interest rate is below the benchmark interest rate prescribed in subsection 109N(2). The accounts indicate the $120,000 loan funds were deposited in a bank account and not used to fund general trust activities. 7. On 30 April 2011, Jones Holding Co Pty Ltd, withdraws $100,000 from the trust's bank account which it lends to Jack Jones, a shareholder of Jones Pty Ltd (see Diagram 1). Jack uses the $100,000 for private purposes. Diagram 1 8. Having regard to all the circumstances, a reasonable person would conclude that Jones Pty Ltd loaned $120,000 to Jones Holding Co Pty Ltd as trustee for the Jones Family Trust solely or mainly as part of an arrangement involving a loan to Jack Jones. Accordingly, subsection 109T(1) will apply to treat Jones Pty Ltd as having made a notional loan to Jack Jones (see Diagram 2). Diagram 2 9. On 2 July 2011, prior to Jones Pty Ltd's 2011 lodgment date, Jones Pty Ltd and Jones Holding Co Pty Ltd as trustee for the Jones Family Trust enter into a compliant section 109N loan agreement in respect of the loan of 15 September 2010. They do this by varying their loan agreement to confirm a 7 year term and to specify that interest will be charged at the benchmark interest rate, with minimum yearly repayments to be paid as required by subsection 109E(6). The variations to the loan agreement are made effective from 15 September 2010. 10. There are no other relevant facts and circumstances. 11. For the purposes of determining the amount of the notional loan under subsection 109W(1) the Commissioner will have regard to the fact the loan between Jones Pty Ltd and Jones Holding Co Pty Ltd as trustee for the Jones Family Trust complies with section 109N. As such the amount that would otherwise have been the amount of the notional loan, for section 109W purposes, will be reduced by $100,000 and resulting in a notional loan with a value of nil (see Diagram 3). Diagram 3 Example 2 12. Assume the same facts as in Example 1 except that Jones Holding Co Pty Ltd: 13. Having regard to all the circumstances, a reasonable person would conclude that Jones Pty Ltd loaned $120,000 to Jones Holding Co Pty Ltd solely or mainly as part of an arrangement involving a loan to Jack Jones. Accordingly, subsection 109T(1) will apply to treat Jones Pty Ltd as having made a notional loan to Jack Jones. 14. For the purposes of determining the amount of the notional loan under subsection 109W(1) the Commissioner will have regard to the amount that Jones Holding Co Pty Ltd loaned to Jack Jones and the fact Jones Holding Co Pty Ltd is not likely to be able to make the minimum yearly repayments to Jones Pty Ltd as required under the varied loan agreement. For section 109W purposes the amount of the notional loan will be $100,000 (see Diagram 4). Diagram 4 Example 3 15. Assume the same facts as in Example 1 except that: 16. There are no other relevant facts or circumstances. 17. Having regard to all the circumstances, a reasonable person would conclude that Jones Pty Ltd loaned $120,000 to Jones Holding Co Pty Ltd solely or mainly as part of an arrangement involving a loan to Jack Jones. Accordingly, subsection 109T(1) will apply to treat Jones Pty Ltd as having made a notional loan to Jack Jones. 18. For the purposes of determining the amount of the notional loan under subsection 109W(1) the Commissioner will have regard to the amount that Jones Holding Co Pty Ltd loaned to Jack Jones and the fact Jones Holding Co Pty Ltd had the capacity to make loan repayments to Jones Pty Ltd but made no repayments during this time . For section 109W purposes the amount of the notional loan will be $100,000 (see Diagram 5). Diagram 5 Example 4 19. Assume the same facts as in Example 1 except that: 20. There are no other relevant facts or circumstances. 21. Having regard to all the circumstances, a reasonable person would conclude that Jones Pty Ltd loaned $120,000 to Jones Holding Co Pty Ltd solely or mainly as part of an arrangement involving a loan to Jack Jones. Accordingly, subsection 109T(1) will apply to treat Jones Pty Ltd as having made a notional loan to Jack Jones. 22. For the purposes of determining the amount of the notional loan under subsection 109W(1) the Commissioner will have regard to the amount that Jones Holding Co Pty Ltd loaned to Jack Jones and the fact the loan Jones Holding Co Pty Ltd owed Jones Pty Ltd was forgiven during the 2011-12 income year. For section 109W purposes the amount of the notional loan will be $100,000 (see Diagram 6). Diagram 6 Date of effect 23. This Determination applies to years of income commencing both before and after its date of issue. However, this Determination will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Determination (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). Commissioner of Taxation 15 June 2011



Examples: Example 1: 5. The Jones family conduct their business and investment activities through a number of corporate and trust entities. 6. On 15 September 2010 Jones Pty Ltd makes a loan of $120,000 to Jones Holding Co Pty Ltd as trustee for the Jones Family Trust. This loan does not comply with the requirements of section 109N at the time the loan is made as the interest rate is below the benchmark interest rate prescribed in subsection 109N(2). The accounts indicate the $120,000 loan funds were deposited in a bank account and not used to fund general trust activities. 7. On 30 April 2011, Jones Holding Co Pty Ltd, withdraws $100,000 from the trust's bank account which it lends to Jack Jones, a shareholder of Jones Pty Ltd (see Diagram 1). Jack uses the $100,000 for private purposes. Diagram 1 8. Having regard to all the circumstances, a reasonable person would conclude that Jones Pty Ltd loaned $120,000 to Jones Holding Co Pty Ltd as trustee for the Jones Family Trust solely or mainly as part of an arrangement involving a loan to Jack Jones. Accordingly, subsection 109T(1) will apply to treat Jones Pty Ltd as having made a notional loan to Jack Jones (see Diagram 2). Diagram 2 9. On 2 July 2011, prior to Jones Pty Ltd's 2011 lodgment date, Jones Pty Ltd and Jones Holding Co Pty Ltd as trustee for the Jones Family Trust enter into a compliant section 109N loan agreement in respect of the loan of 15 September 2010. They do this by varying their loan agreement to confirm a 7 year term and to specify that interest will be charged at the benchmark interest rate, with minimum yearly repayments to be paid as required by subsection 109E(6). The variations to the loan agreement are made effective from 15 September 2010. 10. There are no other relevant facts and circumstances. 11. For the purposes of determining the amount of the notional loan under subsection 109W(1) the Commissioner will have regard to the fact the loan between Jones Pty Ltd and Jones Holding Co Pty Ltd as trustee for the Jones Family Trust complies with section 109N. As such the amount that would otherwise have been the amount of the notional loan, for section 109W purposes, will be reduced by $100,000 and resulting in a notional loan with a value of nil (see Diagram 3). Diagram 3 | Example 2: 12. Assume the same facts as in Example 1 except that Jones Holding Co Pty Ltd: 13. Having regard to all the circumstances, a reasonable person would conclude that Jones Pty Ltd loaned $120,000 to Jones Holding Co Pty Ltd solely or mainly as part of an arrangement involving a loan to Jack Jones. Accordingly, subsection 109T(1) will apply to treat Jones Pty Ltd as having made a notional loan to Jack Jones. 14. For the purposes of determining the amount of the notional loan under subsection 109W(1) the Commissioner will have regard to the amount that Jones Holding Co Pty Ltd loaned to Jack Jones and the fact Jones Holding Co Pty Ltd is not likely to be able to make the minimum yearly repayments to Jones Pty Ltd as required under the varied loan agreement. For section 109W purposes the amount of the notional loan will be $100,000 (see Diagram 4). Diagram 4 | Example 3: 15. Assume the same facts as in Example 1 except that: 16. There are no other relevant facts or circumstances. 17. Having regard to all the circumstances, a reasonable person would conclude that Jones Pty Ltd loaned $120,000 to Jones Holding Co Pty Ltd solely or mainly as part of an arrangement involving a loan to Jack Jones. Accordingly, subsection 109T(1) will apply to treat Jones Pty Ltd as having made a notional loan to Jack Jones. 18. For the purposes of determining the amount of the notional loan under subsection 109W(1) the Commissioner will have regard to the amount that Jones Holding Co Pty Ltd loaned to Jack Jones and the fact Jones Holding Co Pty Ltd had the capacity to make loan repayments to Jones Pty Ltd but made no repayments during this time . For section 109W purposes the amount of the notional loan will be $100,000 (see Diagram 5). Diagram 5 | Example 4: 19. Assume the same facts as in Example 1 except that: 20. There are no other relevant facts or circumstances. 21. Having regard to all the circumstances, a reasonable person would conclude that Jones Pty Ltd loaned $120,000 to Jones Holding Co Pty Ltd solely or mainly as part of an arrangement involving a loan to Jack Jones. Accordingly, subsection 109T(1) will apply to treat Jones Pty Ltd as having made a notional loan to Jack Jones. 22. For the purposes of determining the amount of the notional loan under subsection 109W(1) the Commissioner will have regard to the amount that Jones Holding Co Pty Ltd loaned to Jack Jones and the fact the loan Jones Holding Co Pty Ltd owed Jones Pty Ltd was forgiven during the 2011-12 income year. For section 109W purposes the amount of the notional loan will be $100,000 (see Diagram 6). Diagram 6 Date of effect 23. This Determination applies to years of income commencing both before and after its date of issue. However, this Determination will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Determination (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). Commissioner of Taxation 15 June 2011 Background 24. Division 7A is an anti-avoidance or 'integrity' provision directed at preventing private companies from making tax-free distributions of profits to shareholders (or their associates) in the form of payments, loans or forgiven debts. 25. In particular, where a private company: that amount is, unless it comes within specified exclusions, treated as an assessable dividend to the extent that, broadly speaking, there are realised or unrealised profits in the company. 26. If a loan made by a private company to a shareholder (or their associate) is a section 109N compliant loan, it will not be treated as an assessable dividend. 27. Subsection 109N(1) requires that: 28. A payment made by a private company to a shareholder (or their associate) will also not be treated as an assessable dividend if it is converted to a section 109N compliant loan before the company's lodgment date for the year of income in which the payment was made. [5] 29. Other types of loans may also be excluded from being treated as a dividend, for example, loans made by a private company in the ordinary course of its business if made on its usual terms applicable to arm's length parties under section 109M. Deemed payment or notional loan 30. Division 7A contains, in Subdivision E, interposed entity provisions. 31. Subdivision E is an anti-avoidance provision and is concerned with back-to-back arrangements under which a private company pays or loans an amount to an interposed entity on the understanding that the interposed entity or another interposed entity will pay or loan an amount to the shareholder of the private company or an associate of the shareholder (the 'target entity'). In these circumstances, subsection 109T(1) may apply to treat the private company as having made: 32. Specifically, subsection 109T(1) provides that Division 7A will operate as if a private company makes a deemed payment or notional loan, as described in section 109V or 109W, to the target entity if: 33. The test in paragraph 109T(1)(b) is approached from the perspective of a reasonable person and applies having regard to the prevailing circumstances at the time when the interposed entity makes the payment or loan to the target entity. 34. Paragraph 109T(1)(b) makes no reference to there being any purpose or intent of avoiding Division 7A. It merely refers to the need for a payment or loan from the private company to the interposed entity that a reasonable person would conclude was made as part of an arrangement involving a payment or loan to the target entity, that is a back-to-back arrangement. Nonetheless, such a purpose or intent may help establish such a reasonable conclusion. Exception to section 109T creating a Division 7A dividend 35. Subsection 109T(1) will not operate to treat the target entity as having received a payment or loan from a private company if the private company is taken (under Subdivision B) to pay a dividend as a result of the actual payment or loan to the first interposed entity. [6] 36. That is, if an actual payment or loan made by the private company to an interposed entity results in the private company being taken to have paid a dividend to that interposed entity, then the private company will not be taken to have also made a payment or loan to the target entity. 37. If the loan between the private company and the interposed entity is a section 109N compliant loan (or the payment from the private company to the interposed entity is converted into a section 109N compliant loan) before the private company's lodgment date for the income year in which that loan or payment was made, the private company will not be taken to have paid a dividend to the interposed entity. In this situation the exception in subsection 109T(3) will be insufficient to itself prevent Division 7A from otherwise applying to the deemed payment or notional loan made by the private company to the target entity (the shareholder (or their associate)). 38. However, if, on the other hand, the agreement under which the actual loan from an interposed entity to the target entity is a section 109N compliant loan, the notional loan will also be treated as being a section 109N compliant loan, and will therefore not be treated as an assessable dividend. [7] Amount of deemed payment or notional loan determined by the Commissioner 39. Where subsection 109T(1) applies, the amount of the deemed payment the private company is taken to have paid the target entity or the notional loan the private company is taken to have made to the target entity is the amount (if any) determined by the Commissioner. [8] 40. In determining the amount of the deemed payment or notional loan that the private company is taken to have made, the Commissioner must take account of: 41. Subsections 109V(2) and 109W(2) do not exhaustively describe the factors which the Commissioner can consider when quantifying the payment or loan. In particular, it is relevant to have regard to the commerciality of the loan from the private company to the interposed entity 42. Whether or not the loan from the private company to the interposed entity complies with section 109N and repayments are made pursuant to section 109E are relevant factors when determining the commerciality of the originating loan. Other relevant factors for the Commissioner to take into account 43. Division 7A is directed at preventing private companies from making tax-free distributions of profits to shareholders (or their associates) in the form of payments, loans or forgiven debts. Within the policy framework of Division 7A, it is acknowledged that loans made by private companies that are either repaid or that meet minimum interest rate, maximum term and minimum yearly repayment requirements (that is, section 109N compliant loans) by the relevant lodgment date should not be treated as dividends. These loans are on an acceptable commercial footing such that it would be inappropriate to treat them as being disguised distributions of profits to shareholders or their associates. [10] 44. Separately subsection 109T(3), in the interposed entity provisions of Subdivision E, recognises that where a payment or loan from a private company to an interposed entity has already been dealt with under Division 7A it would be inappropriate for that dealing to also attract the interposed entity provisions. 45. When these aspects of Division 7A are viewed together, it is evident that it is relevant for the Commissioner to have regard to how any payment or loan from the private company to an interposed entity has been dealt with by the lodgment date of the private company for the year in which the payment or loan was made. To the extent that a payment from the private company to the interposed entity is converted into a section 109N compliant loan or a loan that is then repaid by the relevant lodgment date, or the loan from the private company to the interposed entity is a section 109N compliant loan or is repaid by the relevant lodgment date, it has been dealt with in a manner which should not, without more, attract the provisions of Division 7A that treat a dividend as arising. 46. Accordingly, although the private company is taken to have paid or loaned the amount to the interposed entity at the time the interposed entity made the payment or loan to the target entity, the Commissioner will take into account: 47. This is consistent with other provisions in Division 7A which enable a taxpayer's Division 7A outcome for a particular income year to be determined at any time up to the relevant lodgment date. Determining the Division 7A outcome at the lodgment date allows taxpayers to identify Division 7A issues and to take appropriate action (such as putting a section 109N complying loan agreement in place after a relevant loan is made) at any time before the relevant lodgment date. 48. In some instances the Commissioner will be asked to determine the amount of the deemed payment or notional loan after the lodgment date for the private company in the year of income in which the deemed payment or notional loan arises. The determination may occur in a subsequent income year. To the extent that other relevant factors after the lodgment date are relevant and in the Commissioner's knowledge then they may also be taken into account. 49. In particular cases there may be other matters that need to be taken into account by the Commissioner to ensure that Subdivision E is not circumvented. For example, if the actual loans referred to in subsection 109T(1) are repaid in a manner that would be disregarded under section 109R if it applied to those repayments, it should not be taken into account by the Commissioner in determining the amount of any deemed loan under section 109W. Likewise, if an actual loan referred to in subsection 109T(1) is a section 109N compliant loan in circumstances where the Commissioner is aware that minimum yearly repayments as calculated under subsection 109E(6) are not being made, this loan should still then be taken into account for the purposes of determining the amount of any notional loan under section 109W. Previously issued in draft form as TD 2010/D10

Appendix: Background: 24. Division 7A is an anti-avoidance or 'integrity' provision directed at preventing private companies from making tax-free distributions of profits to shareholders (or their associates) in the form of payments, loans or forgiven debts. 25. In particular, where a private company: that amount is, unless it comes within specified exclusions, treated as an assessable dividend to the extent that, broadly speaking, there are realised or unrealised profits in the company. 26. If a loan made by a private company to a shareholder (or their associate) is a section 109N compliant loan, it will not be treated as an assessable dividend. 27. Subsection 109N(1) requires that: 28. A payment made by a private company to a shareholder (or their associate) will also not be treated as an assessable dividend if it is converted to a section 109N compliant loan before the company's lodgment date for the year of income in which the payment was made. [5] 29. Other types of loans may also be excluded from being treated as a dividend, for example, loans made by a private company in the ordinary course of its business if made on its usual terms applicable to arm's length parties under section 109M. | Deemed payment or notional loan: 30. Division 7A contains, in Subdivision E, interposed entity provisions. 31. Subdivision E is an anti-avoidance provision and is concerned with back-to-back arrangements under which a private company pays or loans an amount to an interposed entity on the understanding that the interposed entity or another interposed entity will pay or loan an amount to the shareholder of the private company or an associate of the shareholder (the 'target entity'). In these circumstances, subsection 109T(1) may apply to treat the private company as having made: 32. Specifically, subsection 109T(1) provides that Division 7A will operate as if a private company makes a deemed payment or notional loan, as described in section 109V or 109W, to the target entity if: 33. The test in paragraph 109T(1)(b) is approached from the perspective of a reasonable person and applies having regard to the prevailing circumstances at the time when the interposed entity makes the payment or loan to the target entity. 34. Paragraph 109T(1)(b) makes no reference to there being any purpose or intent of avoiding Division 7A. It merely refers to the need for a payment or loan from the private company to the interposed entity that a reasonable person would conclude was made as part of an arrangement involving a payment or loan to the target entity, that is a back-to-back arrangement. Nonetheless, such a purpose or intent may help establish such a reasonable conclusion. | Exception to section 109T creating a Division 7A dividend: 35. Subsection 109T(1) will not operate to treat the target entity as having received a payment or loan from a private company if the private company is taken (under Subdivision B) to pay a dividend as a result of the actual payment or loan to the first interposed entity. [6] 36. That is, if an actual payment or loan made by the private company to an interposed entity results in the private company being taken to have paid a dividend to that interposed entity, then the private company will not be taken to have also made a payment or loan to the target entity. 37. If the loan between the private company and the interposed entity is a section 109N compliant loan (or the payment from the private company to the interposed entity is converted into a section 109N compliant loan) before the private company's lodgment date for the income year in which that loan or payment was made, the private company will not be taken to have paid a dividend to the interposed entity. In this situation the exception in subsection 109T(3) will be insufficient to itself prevent Division 7A from otherwise applying to the deemed payment or notional loan made by the private company to the target entity (the shareholder (or their associate)). 38. However, if, on the other hand, the agreement under which the actual loan from an interposed entity to the target entity is a section 109N compliant loan, the notional loan will also be treated as being a section 109N compliant loan, and will therefore not be treated as an assessable dividend. [7] | Amount of deemed payment or notional loan determined by the Commissioner: 39. Where subsection 109T(1) applies, the amount of the deemed payment the private company is taken to have paid the target entity or the notional loan the private company is taken to have made to the target entity is the amount (if any) determined by the Commissioner. [8] 40. In determining the amount of the deemed payment or notional loan that the private company is taken to have made, the Commissioner must take account of: 41. Subsections 109V(2) and 109W(2) do not exhaustively describe the factors which the Commissioner can consider when quantifying the payment or loan. In particular, it is relevant to have regard to the commerciality of the loan from the private company to the interposed entity 42. Whether or not the loan from the private company to the interposed entity complies with section 109N and repayments are made pursuant to section 109E are relevant factors when determining the commerciality of the originating loan. Other relevant factors for the Commissioner to take into account 43. Division 7A is directed at preventing private companies from making tax-free distributions of profits to shareholders (or their associates) in the form of payments, loans or forgiven debts. Within the policy framework of Division 7A, it is acknowledged that loans made by private companies that are either repaid or that meet minimum interest rate, maximum term and minimum yearly repayment requirements (that is, section 109N compliant loans) by the relevant lodgment date should not be treated as dividends. These loans are on an acceptable commercial footing such that it would be inappropriate to treat them as being disguised distributions of profits to shareholders or their associates. [10] 44. Separately subsection 109T(3), in the interposed entity provisions of Subdivision E, recognises that where a payment or loan from a private company to an interposed entity has already been dealt with under Division 7A it would be inappropriate for that dealing to also attract the interposed entity provisions. 45. When these aspects of Division 7A are viewed together, it is evident that it is relevant for the Commissioner to have regard to how any payment or loan from the private company to an interposed entity has been dealt with by the lodgment date of the private company for the year in which the payment or loan was made. To the extent that a payment from the private company to the interposed entity is converted into a section 109N compliant loan or a loan that is then repaid by the relevant lodgment date, or the loan from the private company to the interposed entity is a section 109N compliant loan or is repaid by the relevant lodgment date, it has been dealt with in a manner which should not, without more, attract the provisions of Division 7A that treat a dividend as arising. 46. Accordingly, although the private company is taken to have paid or loaned the amount to the interposed entity at the time the interposed entity made the payment or loan to the target entity, the Commissioner will take into account: 47. This is consistent with other provisions in Division 7A which enable a taxpayer's Division 7A outcome for a particular income year to be determined at any time up to the relevant lodgment date. Determining the Division 7A outcome at the lodgment date allows taxpayers to identify Division 7A issues and to take appropriate action (such as putting a section 109N complying loan agreement in place after a relevant loan is made) at any time before the relevant lodgment date. 48. In some instances the Commissioner will be asked to determine the amount of the deemed payment or notional loan after the lodgment date for the private company in the year of income in which the deemed payment or notional loan arises. The determination may occur in a subsequent income year. To the extent that other relevant factors after the lodgment date are relevant and in the Commissioner's knowledge then they may also be taken into account. 49. In particular cases there may be other matters that need to be taken into account by the Commissioner to ensure that Subdivision E is not circumvented. For example, if the actual loans referred to in subsection 109T(1) are repaid in a manner that would be disregarded under section 109R if it applied to those repayments, it should not be taken into account by the Commissioner in determining the amount of any deemed loan under section 109W. Likewise, if an actual loan referred to in subsection 109T(1) is a section 109N compliant loan in circumstances where the Commissioner is aware that minimum yearly repayments as calculated under subsection 109E(6) are not being made, this loan should still then be taken into account for the purposes of determining the amount of any notional loan under section 109W. Previously issued in draft form as TD 2010/D10




Related rulings: TR 2006/10
Legislative references: ITAA 1936 ITAA 1936 Pt III Div 7A ITAA 1936 Pt III Div 7A Subdiv B ITAA 1936 Pt III Div 7A Subdiv E ITAA 1936 109C(1) ITAA 1936 109D(1) ITAA 1936 109D(4A) ITAA 1936 109E ITAA 1936 109E(6) ITAA 1936 109M ITAA 1936 109N ITAA 1936 109N(1) ITAA 1936 109N(2) ITAA 1936 109R ITAA 1936 109T ITAA 1936 109T(1) ITAA 1936 109T(1)(b) ITAA 1936 109T(3) ITAA 1936 109V ITAA 1936 109V(1) ITAA 1936 109V(2) ITAA 1936 109W ITAA 1936 109W(1) ITAA 1936 109W(2) ITAA 1936 109X(2) ITAA 1936 109X(3) TAA 1953
Subject references: deemed dividends disguised dividends dividends
Other references: Explanatory Memorandum to the Tax Laws Amendment (2004 Measures No. 7) Bill 2004