Prior to Tax Law Rewrite this provision was in ICTA88/S209 (2)(e)(iii).Ī further transfer pricing rule applies to interest which would not be paid on an arm’s length basis. The remainder of the interest or other distribution may, however, be caught for example by CTA10/S1000 (1) F under condition C of the ‘special security’ rules, interest dependent on the results of the business. In other words, only the excessive element of the interest or other distribution is caught by CTA10/S1000 (1) E, under the ‘non commercial’ rule. represents a reasonable commercial return for the use of that principal.represents the return of the principal itself, or.any interest or other distribution out of assets of the company in respect of securities where the consideration given by the company in respect of the principal secured represents more than a reasonable commercial return for the use of that principal.ĬTA10/S1000 (1) E does not treat as a distribution any part of the consideration that either:. Such distributions may be made, for example, by paying interest at an excessive rate or at a rate dependent on the results of the company’s business.ĬTA10/S1000 (1) E treats as a distribution: There is legislation that re-characterises as a distribution certain interest or other value passing from a company in respect of securities which in reality amounts to the withdrawal of profits from a company. CTA10/S1000 (1) E and F - ‘non commercial’ and ‘special’ securities
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