Tax Laws Amendment (2007 Measures No. 3) Act 2007 (79 of 2007)

Schedule 1   Distributions to entities connected with a private company and related issues

Part 1   Main amendments

Income Tax Assessment Act 1936

6   After subsection 109E(3)

Insert:

(3A) Subsection (3B) applies if:

(a) a private company is taken to have made an amalgamated loan (the old amalgamated loan ) during a year of income (the original year of income ); and

(b) the maximum term of the old amalgamated loan under subsection 109N(3) was 7 years; and

(c) in a later year of income (the later year of income ):

(i) a constituent loan taken account of by the old amalgamated loan becomes secured by a mortgage over real property; and

(ii) the term of the constituent loan is extended; and

(d) as a result of the mortgage, the maximum term of the constituent loan under subsection 109N(3) is 25 years; and

(e) the term of the constituent loan after the extension (including the period before the extension during which the constituent loan was in existence) does not exceed 25 years.

(3B) For the purposes of this Division in relation to the later year of income and subsequent years of income:

(a) treat the constituent loan as a new amalgamated loan that takes account of that constituent loan; and

(b) treat the new amalgamated loan as having been made just before the start of the later year of income; and

(c) treat the amount of the new amalgamated loan just before the start of the later year of income as the amount of the constituent loan that had not been repaid at that time; and

(d) unless paragraph (e) applies - reduce the amount of the old amalgamated loan just before the start of the later year of income by the amount of the new amalgamated loan at that time; and

(e) if the constituent loan was the only constituent loan taken account of by the old amalgamated loan - disregard the old amalgamated loan.