Introduction Overview Overview Section 761: Deemed loan relationship if borrower is a company
2307.This section brings the loan relationship provisions into play if there is a type 1 finance arrangement and the borrower is a company. It is based on section 774B(5), (7) and (8) of ICTA.
2308.If there is a type 1 finance arrangement and the borrower is a company, then either section 759 prevents it having the relevant effect in relation to the company, in which case subsection (1)(c)(i) applies this section, or else section 760 applies to the company, in which case subsection (1)(c)(ii) applies this section.
2309.Subsection (2) applies the loan relationship provisions of CTA 2009 to the company mentioned in subsection (1), deeming the advance to be a money debt owed by the company and the arrangement to be a debtor relationship of the company. “Money debt” and “debtor relationship” have the meanings given by, respectively, sections 303 and 302(6) of CTA 2009.
2310.Under subsection (3), any finance charge recorded in the company’s accounts is deemed to be interest payable under the deemed loan relationship.
2311.If subsection (3) deems there to be interest payable, subsection (4) determines when it is deemed to be paid.