Interpretative Decision - ID 2014/40
17 December 2014
The second interpretative decision – ID 2014/40 – relates to the acquisition of real estate where the key features of the loan terms were
- zero interest rate;
- LVR ratio of 80%;
- loan term 15 years;
- monthly repayments of loan principal; and
- no security other than a mortgage over the acquired property (which was real estate in this case).
It should be noted that in all other respects the arrangements described in each ID satisfied the requirements of s67A.
In each ID the ATO takes the view that the entire amount of the income derived from the limited borrowing arrangements is non-arms’ length income – presumably that includes any dividends, lease payments and, ultimately, any capital proceeds on the sale of the acquired property of each holding trust.
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