Income Tax Assessment Act 1997
CHAPTER 3
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SPECIALIST LIABILITY RULES
PART 3-10
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FINANCIAL TRANSACTIONS
Division 243
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Limited recourse debt
Subdivision 243-C
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Amounts included in assessable income and deductions
Operative provisions
SECTION 243-50 Deduction for payments for replacement debt
Payments where debt refinanced
243-50(1)
This section applies if:
(a) an amount was included in the debtor's assessable income under section 243-40 or a deduction was reduced under section 243-55 ; and
(b) an amount funded by a *non-arm's length limited recourse debt (the replacement debt ) was disregarded in calculations under subsection 243-35(4) ; and
(c) the debtor makes a payment, after the termination of the original debt arrangement, in respect of the replacement debt (other than to the extent to which it is a payment of interest, of *notional interest or in the nature of interest).
243-50(2)
This is how to work out the amount of the deduction: Working out the amount of the deduction
Step 1.
Step 2.
Step 3.
243-50(3)
The amount can be deducted for the income year in which the payment is made.
Division not to apply to termination of replacement debt
243-50(4)
This Division does not apply to termination of the replacement debt referred to in paragraph (1)(b).
Limit on deductions
243-50(5)
The total amounts deducted under section 243-45 in respect of the original debt, or under this section in respect of the replacement debt, cannot exceed the sum of:
(a) any amounts included in the debtor's assessable income under this Division in respect of the original debt; and
(b) any amount by which deductions in respect of the original debt were reduced under section 243-55 .
View history note
Hide history noteSECTION 243-50 Deduction for payments for replacement debt
Payments where debt refinanced
243-50(1)
This section applies if:
(a) an amount was included in the debtor's assessable income under section 243-40 or a deduction was reduced under section 243-55 ; and
(b) an amount funded by a *non-arm's length limited recourse debt (the replacement debt ) was disregarded in calculations under subsection 243-35(4) ; and
(c) the debtor makes a payment, after the termination of the original debt arrangement, in respect of the replacement debt (other than to the extent to which it is a payment of interest, of *notional interest or in the nature of interest).
243-50(2)
This is how to work out the amount of the deduction: Working out the amount of the deduction
Step 1.
Work out the amount that would be worked out under subsection 243-35(2) if the replacement debt were terminated immediately before the payment.
Step 2.
Work out the amount that would have been worked out under subsection 243-35(4) at that time if the payment had been made in respect of the original debt and it had been taken into account.
Step 3.
The amount of the deduction is the amount (if any) by which the amount worked out under Step 2 exceeds the amount worked out under Step 1.
243-50(3)
The amount can be deducted for the income year in which the payment is made.
Division not to apply to termination of replacement debt
243-50(4)
This Division does not apply to termination of the replacement debt referred to in paragraph (1)(b).
Limit on deductions
243-50(5)
The total amounts deducted under section 243-45 in respect of the original debt, or under this section in respect of the replacement debt, cannot exceed the sum of:
(a) any amounts included in the debtor's assessable income under this Division in respect of the original debt; and
(b) any amount by which deductions in respect of the original debt were reduced under section 243-55 .
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