1128.This section allows income tax relief to be given if there is a type 1 finance arrangement and the borrower is not a partnership. It is based on section 774B(4), (7) and (8) of ICTA.
1129.As well as specifying the conditions for this section to apply, subsection (1) introduces the person (namely, the borrower) eligible for income tax relief.
1130.Subsection (2) permits the borrower mentioned in subsection (1) to treat the amount as interest payable on a loan. If the relevant statutory conditions are met, the deemed interest qualifies for income tax relief under Chapter 1 of Part 8 of ITA.
1131.If subsection (2) deems there to be interest payable, subsection (3) determines when it is deemed to be paid.