Income Tax Act 2007 section 337

Determination of "the invested amount"

Section 337 sets out how to calculate "the invested amount" for loans, securities or shares that form part of a community investment, particularly addressing the complications that arise where a loan may be drawn down in tranches over time.

• For loans, the invested amount is based on the average capital balance of the loan, calculated differently depending on which tax year of the five-year period you are in.
• For securities or shares, the invested amount is simply the amount the investor originally subscribed (paid) for them.
• In later tax years (from the third year onwards), the invested amount for a loan is capped at the average capital balance for a six-month window beginning 18 months after the investment date, if that produces a lower figure.
• The average capital balance is calculated as the mean of the daily outstanding capital balances over the relevant period, and the overall figure may be further adjusted where the investor has received value back under sections 363 and 369.