Section 809BZD — Income Tax Act 2007: Deemed interest if borrower is not a partnership

Deemed interest if borrower is not a partnership 809BZD 1 This section applies if—

a there is a type 1 finance arrangement, b the borrower is not a partnership, c the arrangement is prevented by section 809BZB from having the relevant effect in relation to the borrower, or section 809BZC applies to the borrower, and d in accordance with generally accepted accounting practice the borrower's accounts record an amount as a finance charge in respect of the advance.

2 For income tax purposes the borrower may treat the amount as interest payable on a loan.

3 If an amount is treated as interest (“deemed interest”) under subsection (2), to find out when it is paid—

a treat the payments mentioned in section 809BZA(2)(c) as consisting of amounts for repaying the advance and amounts (“the interest elements”) in respect of interest on the advance, b treat the interest elements of the payments as paid when the payments are paid, and c treat the deemed interest as paid at the times when the interest elements are treated as paid.