Income Tax Assessment Act 1997

Interest payments - distributions that flow indirectly to the trustee of a trust  
207-165(1)
For the purposes of this Subdivision, a *franked distribution is treated as an interest payment if:

(a) it *flows indirectly to an entity under subsection 207-35(4) as trustee of a trust; and

(b) the interest in the trust in respect of which the trustee is liable to be assessed:

(i) was acquired, or was acquired for a period that was extended, at or after the commencing time; or

(ii) was acquired as part of a *financing arrangement for the entity (including an arrangement extending to an earlier arrangement) entered into at or after the commencing time; and

(c) having regard to the matters in subsection (2), the distribution could reasonably be regarded as equivalent to the payment of interest on a loan.

207-165(2)
A *distribution that *flows indirectly to the trustee of a trust can reasonably be regarded as equivalent to the payment of interest on a loan if:

(a) the trustee is liable to be assessed under Division 6 of Part III of the Income Tax Assessment Act 1936 , for the income year in which the distribution is made, on an amount that is attributable to the distribution; and

(b) having regard to the following matters, the amount could reasonably be regarded as equivalent to the payment of interest on a loan:

(i) the way in which the amount was calculated;

(ii) the conditions applying to the inclusion of the amount;

(iii) any other relevant matters.

207-165(3)
The commencing time , for the purposes of subsection (1), is 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.