Income Tax Act 2007 section 564Y

Provision not at arm's length: relevant return

Section 564Y denies income tax deductions for payments made under alternative finance arrangements that have been excluded from the alternative finance rules because they are not on arm's length terms.

• Where section 564H has excluded arrangements from being treated as alternative finance arrangements because they are not at arm's length, section 564Y applies to deny tax relief on payments made under those arrangements
• A person making payments of relevant return under such arrangements cannot claim any deduction for those payments when calculating trading or other profits for income tax purposes
• Equally, no deduction is available for the relevant return when calculating the person's net income for income tax purposes
• The term "relevant return" takes the same meaning as defined in section 564H(3), ensuring consistency between the exclusion rule and this deduction restriction