Commentary on Sections Overview Overview Section 408: Replacement loans
1148.This section makes provision for cases where a loan, interest on which would be eligible for relief under some provisions of this Chapter, is used in repaying another qualifying loan. It is based on section 363(4) of ICTA.
1149.Subsection (3) ensures that the two loans are treated as a single loan for the purposes of this Chapter. In order that this rule works correctly when looking at how the proceeds are applied, it is subject to subsection (5) under which references to the use of a loan are generally taken as referring to the use of the original loan.
1150.Subsection (4) makes it clear that any restriction under section 406 (recovery of capital) applies if capital is recovered while the second loan is in place.