Income Tax Act 2007 section 809BZB

Certain tax consequences not to have effect

Section 809BZB prevents certain favourable income tax consequences from arising where they would otherwise result from a type 1 finance arrangement.

• Where a type 1 finance arrangement would produce a favourable income tax result — such as income escaping charge, amounts being omitted from income calculations, or income deductions arising — those consequences are blocked
• For individual or connected-person borrowers, the section prevents income going untaxed, amounts being left out of income computations, or unwarranted income deductions being obtained
• Where the borrower is a partnership, the same protections apply but are directed at the individual partners rather than the partnership itself
• For the purposes of this section, the borrower and the lender are treated as not being connected with one another, so the connected-persons test does not apply between them