Tax Laws Amendment (2010 Measures No. 5) Act 2011 (61 of 2011)

Schedule 2   Capital protected borrowings

Income Tax Assessment Act 1997

7   Subsections 247-20(4) and (5)

Repeal the subsections, substitute:

(4) If:

(a) the *capital protected borrowing is at a fixed rate for all or part of the term of the capital protected borrowing; and

(b) that fixed rate is applicable to the capital protected borrowing for all or part of the income year;

use the rate worked out under subsection (5) at the first time an amount covered by step 1 of the method statement in subsection (3) was incurred, in any income year, during the term of the capital protected borrowing or that part of the term.

(5) The rate (the adjusted loan rate ), at a particular time, is the sum of:

(a) the Reserve Bank of Australia’s Indicator Lending Rate for Standard Variable Housing Loans at that time; and

(b) 100 basis points.

(5A) If:

(a) the *capital protected borrowing is at a variable rate for all or part of the term of the capital protected borrowing; and

(b) a variable rate is applicable to the capital protected borrowing for all or part of the income year;

use the average of the adjusted loan rates applicable during those parts of the income year when the capital protected borrowing is at a variable rate.