Income Tax Act 2007 section 402

Eligibility requirements for interest on loans within section 401

Section 402 sets out three conditions that must all be met before an individual can claim tax relief on interest paid on a loan used to invest in a co-operative under section 401.

• The co-operative must still be operating as a co-operative at the time the interest is paid (Condition A).
• The individual must have spent the greater part of their time working as an employee of the co-operative or one of its subsidiaries, from when the loan was first used through to the date the interest is paid (Condition B).
• The individual must not have recovered any capital from the co-operative during that same period, unless the recovered capital has already been treated as a repayment of the loan under section 406(2) (Condition C).
• All three conditions must be satisfied for the interest to qualify for tax relief — failing any one of them means relief is not available.