Document ID: chunk:federal_register_of_legislation:C2025C00014:section:26aj:p3
Version: federal_register_of_legislation:C2025C00014
Segment Type: section
Provision Reference: s 26AJ (pt 3/6)
Character Range: 227327–229880

loan in respect of the loan period if that interest had been incurred and paid by the recipient on the last day of the loan period.
 (3) If:
 (a) apart from this subsection, an amount (in this subsection called the gross assessable amount) is included in a taxpayer's assessable income of a year of income under paragraph (1)(j) in respect of the provision of property or services; and
 (b) assuming that:
 (i) the recipient of the property or services had, at the time the property or services were provided, incurred and paid unreimbursed expenditure in respect of the provision of the property or services; and
 (ii) the expenditure was equal to the amount of the arm's length value of the property or services;
  a once‑only deduction would, or would apart from Subdivisions F and GA of Division 3 of this Part, and Divisions 28 and 900 of the Income Tax Assessment Act 1997, have been allowable to the recipient in respect of a percentage (in this subsection called the deductible percentage) of the expenditure;
the gross assessable amount is reduced by the deductible percentage.
 (4) For the purposes of the application of this section to a taxpayer, if a person (in this subsection called the provider) makes a loan to another person (who may be the taxpayer) (in this subsection called the recipient):
 (a) the making of the loan is taken to constitute a loan benefit provided by the provider to the recipient; and
 (b) that loan benefit is taken to be provided in respect of each year of income of the taxpayer during the whole or part of which the recipient is under an obligation to repay the whole or any part of the loan.
 (5) For the purposes of this section, if a person (in this subsection called the provider) makes a deferred interest loan (in this subsection called the principal loan) to another person (in this subsection called the recipient):
 (a) the provider is taken, at the end of:
 (i) the period of 6 months commencing on the day on which the principal loan was made; and
 (ii) each subsequent period of 6 months;
  (being in either case a period during the whole of which the recipient is under an obligation to repay the whole or any part of the principal loan) to have made a loan (in this subsection called the deemed loan) to the recipient; and
 (b) the amount of the deemed loan is equal to the amount by which the interest (in this subsection called the accrued interest) that has accrued on the principal loan in respect of that period exceeds the amount (if any) paid in respect of the accrued interest before the