Income Tax Act 2007 section 345

Conditions to be met in relation to loans

Section 345 sets out the three conditions that must be satisfied for a loan to a Community Development Finance Institution (CDFI) to qualify for community investment tax relief.

• The CDFI must receive the full loan amount on the investment date, or if drawdown is permitted, it must be completed within 18 months of that date (Condition A).
• The loan must not carry any right, now or in the future, to be converted into or exchanged for any redeemable loan, securities, shares or other rights within the five-year period (Condition B).
• The loan terms must restrict early repayment: no repayment of capital in the first two years, no more than 25% by the end of year three, no more than 50% by the end of year four, and no more than 75% by the end of year five (Condition C).
• The Treasury may by order substitute different repayment percentages for Condition C, effective for loans made on or after a date specified in the order.