Commonwealth Numbered Acts

FRINGE BENEFITS TAX ASSESSMENT ACT 1986 No. 39 of 1986 - SECT 16

16. (1) Where a person (in this sub-section referred to as the "provider")
makes a loan to another person (in this sub-section referred to as the

"recipient"), the making of the loan shall be taken to constitute a benefit
provided by the provider to the recipient and that benefit shall be taken to
be provided in respect of each year of tax during the whole or a part of which
the recipient is under an obligation to repay the whole or any part of the
loan.

(2) For the purposes of this Act, where-
(a) a person (in this sub-section referred to as the "debtor") is under an
obligation to pay or repay an amount (in this sub-section referred to as the

"principal amount") to another person (in this sub-section referred to as the

"creditor");

   (b)  the principal amount is not the whole or a part of the amount of a
        loan; and

   (c)  after the due date for payment or repayment of the principal amount,
        the whole or part of the principal amount remains unpaid, the
        following provisions have effect:

   (d)  the creditor shall be deemed, immediately after the due date, to have
made a loan (in this sub-section referred to as the "deemed loan") of the
principal amount to the debtor;

   (e)  at any time when the debtor is under an obligation to repay any part
        of the principal amount, the debtor shall be deemed to be under an
        obligation to repay that part of the deemed loan;

   (f)  the deemed loan shall be deemed to have been made-

        (i)    if interest accrues on so much of the principal amount as
               remains from time to time unpaid-at the rate of interest at
               which that interest accrues; or

        (ii)   in any other case-at a nil rate of interest.

(3) For the purposes of this Act, where a person (in this sub-section
referred to as the "provider") makes a deferred interest loan (in this
sub-section referred to as the "principal loan") to another person (in this
sub-section referred to as the "recipient")-

   (a)  the provider shall be deemed, at the end of-

        (i)    the period of 6 months commencing on the day on which the
               principal loan was made; and

        (ii)   each subsequent period of 6 months,
(being in either case a period ending on or after 1 July 1986 during the whole
of which the recipient is under an obligation to repay the whole or any part
of the principal loan) to have made a loan (in this sub-section referred
to as the "deemed loan") to the recipient of an amount equal to the amount by
which the interest (in this sub-section referred to as the "accrued interest")
that has accrued on the principal loan in respect of that period exceeds the
amount (if any) paid in respect of the accrued interest before the end of that
period;

   (b)  where any part of the accrued interest becomes payable or is paid
        after the time when the deemed loan is deemed to have been made, the
        deemed loan shall be reduced accordingly; and

   (c)  the deemed loan shall be deemed to have been made at a nil rate of
        interest.
(4) In sub-section (3), "deferred interest loan" means a loan in respect of
which interest is payable at a rate exceeding nil, other than-

   (a)  a loan where the whole of the interest is due for payment within 6
        months after the loan is made; or

   (b)  a loan where-

        (i)    the interest is payable by instalments;

        (ii)   the intervals between instalments do not exceed 6 months; and

        (iii)  the first instalment is due for payment within 6 months after
               the loan is made.

(5) For the purposes of this Act, where no interest is payable in respect of a
loan, a nil rate of interest shall be taken to be payable in respect of the
loan.