Tax Laws Amendment (2005 Measures No. 5) Act 2005 (162 of 2005)

Schedule 6   Debt and equity interests

Part 1   Related party at call etc. loans

Income Tax Assessment Act 1997

8   At the end of section 974-75

Add:

Further exception for certain related party at call loans

(6) In applying this Division in relation to a particular *scheme and a particular income year (which may be the income year in which the scheme is entered into or a later income year), the scheme is taken not to give rise to an equity interest in a company, and instead to give rise to a debt interest in the company, if:

(a) the scheme takes the form of a loan to the company that satisfies paragraphs (4)(a), (b) and (c); and

(b) the company's annual turnover (worked out at the end of the income year) is less than $20,000,000.

Note: If this subsection does not apply in relation to the previous income year or the next income year, and the scheme gives rise to an equity interest according to the other provisions of this Division, an adjustment to the company's non-share capital account will occur at the end of the previous income year or the start of the next income year (see subsections 164-15(2) and 164-20(3)).

(7) For the purpose of paragraph (6)(b), the question whether a company's annual turnover (worked out at the end of an income year) is less than $20,000,000 is to be determined in accordance with subsection 188-10(2) of the *GST Act, as if that amount of $20,000,000 were a turnover threshold for the purposes of that subsection of the GST Act.