CFM31010 - Loan relationships: what are loan relationships: meaning of loan relationship
CTA09/S302
Loan relationship
The rules in CTA09/PT5 apply to a company바카라 사이트™s profits and deficits from its 바카라 사이트˜loan relationships바카라 사이트™.
The statutory definition of a loan relationship is at S302, and comprises two essential elements:
- The company must stand in the position of debtor or creditor in relation to a money debt. A money debt, in essence, is one that falls to be settled by the transfer of money, or of another money debt - see {CFM31020}.
- The debt must arise from a transaction for the 바카라 사이트˜lending of money바카라 사이트™. This is synonymous with making a loan, and includes any advance of money (CTA09/S476(1)).
Both of these elements must be present for there to be a loan relationship.
However, the concept of arising from the lending of money is expanded in cases where an instrument is issued in respect of the money debt see CFM31050 for more details.
The characteristics of a loan relationship reflect all of its terms
The loan relationship is defined by reference to being party to a money debt. Unless there is a money debt, there can be no loan relationship. However, the concept of a loan relationship is wider than simply the company바카라 사이트™s relationship to that money debt. The relationship comprises the whole relationship that exists in respect of the money debt. So, in particular, the terms and conditions applying to the debt will define the characteristics of the company바카라 사이트™s loan relationship and are taken into account in determining the tax consequences of the loan relationship and its 바카라 사이트˜related transactions바카라 사이트™.
Accordingly, although the loan relationship is defined in terms of the relationship a company has to a money debt, either as debtor or creditor, the characteristics of the loan relationship reflect all of its terms.
Similarly, references to rights or liabilities under a loan relationship are taken to be references to any of the rights or liabilities under the arrangements as a result of which that relationship subsists (CTA09/S305(2)). It also includes the rights or liabilities attached to any security that is issued in relation to the money debt in question (CTA09/S305(3)).
Loan relationship is personal to a company
Typically there are two parties to a money debt - the creditor and the debtor. However, the definition of a loan relationship is personal to a particular company and is determined by reference to that company바카라 사이트™s relationship to a money debt either as creditor or debtor. It is assessing whether a particular company is party to a loan relationship. This fits into the overall regime, which looks to tax a company on its profits and losses from its loan relationships.
In some parts of the regime, the rules depend on the position of other companies. So for example, the connected company rules apply where there is a connection between the company and another company standing in the position of creditor / debtor in respect of the money debt.
Further guidance
CFM31020 onwards explains in more detail what is meant by terms 바카라 사이트˜money debt바카라 사이트™ and 바카라 사이트˜lending of money바카라 사이트™.
CFM31060 explains the term 바카라 사이트˜arising from the lending of money바카라 사이트™ is given an extended definition so that applies whenever an instrument has been issued representing security for the debt or the rights of the creditor in respect of a money debt.
CFM31040 has more on money debts which are not loan relationship (바카라 사이트˜relevant non-lending relationships바카라 사이트™). For example, trade debts that do not arise from lending money.
CFM31130 explains the linked concept of a 바카라 사이트˜related transaction바카라 사이트™. Related transactions are widely defined to include the complete or partial disposal or acquisition of rights under a loan relationship.