Section 408 — Income Tax Act 2007: Replacement loans

Replacement loans 408 1 This section applies to a replacement loan.

2 In subsection (1) “ replacement loan ” means a loan to which section 392, 396, 398 or 401 applies because the loan is used in repaying another loan (“the replaced loan”) to which that section applies.

3 This Chapter, except for sections 385 and 386, applies to the replacement loan as if that loan and the replaced loan were a single loan (subject to subsection (5)).

4 Accordingly, any restriction under section 406 (effect of recovery of capital in the case of some loans) which applies to the replaced loan applies to the replacement loan.

5 But this Chapter, except for sections 385 and 386, applies as if references to the use of the loan were references to the use of the original loan.