Income Tax Act 2007 section 372A

Meaning of "loan" and "interest"

Section 372A extends the definitions of "loan" and "interest" for the purposes of the Community Investment Tax Relief rules, so that alternative finance arrangements (such as Sharia-compliant products) are treated in the same way as conventional lending.

• References to a "loan" in the Community Investment Tax Relief rules include alternative finance arrangements — specifically purchase and resale arrangements, deposit arrangements, and profit share agency arrangements.
• References to "interest" in the same rules include alternative finance return — the equivalent economic return generated under those alternative finance arrangements.
• Each type of alternative finance arrangement has its own detailed supplementary rules (sections 372B, 372C, and 372D) explaining how it fits within the Community Investment Tax Relief framework.
• The effect is to ensure that investors using alternative finance products can access Community Investment Tax Relief on the same basis as those using conventional loans.