Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

Division 7A - Distributions to entities connected with a private company  

Subdivision E - Payments and loans through interposed entities  

SECTION 109X   OPERATION OF SUBDIVISION D IN RELATION TO PAYMENT OR LOAN  

109X(1)   Payment or loan not affected by being made through interposed entity.  

Despite sections 109K and 109L , a private company may be taken under section 109C or 109D to pay a dividend as a result of this Subdivision treating the private company as making a payment or loan to an entity (the target entity ), even if:

(a) the private company is treated that way because it makes a payment or loan to an entity that is a company interposed between the private company and the target entity; or

(b) some or all of the amount paid or lent by a private company to an entity interposed between the private company and the target entity is included in the interposed entity's assessable income for a year of income.

109X(2)   [ Application to certain notional loans]  

Subsections (3) and (4) apply if a notional loan arises under section 109W because an entity interposed between the private company and the target entity makes a loan (the actual loan ) to the target entity.

109X(3)   [ Notional loan agreement]  

For the purposes of section 109N , treat the agreement under which the actual loan was made as the agreement under which the notional loan was made.

109X(4)   [ Notional loan]  

For the purposes of section 109E :

(a) treat the notional loan as an amalgamated loan from the private company to the target entity; and

(b) treat the amount of the notional loan worked out under subsection 109W(1) as the amount of the amalgamated loan; and

(c) treat the agreement under which the actual loan was made as the agreement under which the amalgamated loan was made; and

(d) treat repayments by the target entity of the amount of the notional loan worked out under subsection 109W(3) as payments by the target entity to the private company in relation to the amalgamated loan.