14Loan benefits

14 Loan benefits

(1) If an employer, an associate of an employer or another person acting for the employer or associate, (in this clause called the provider) makes a loan to a recipient, the making of the loan is taken to be a loan benefit provided by the provider to the recipient.

(2) For the purposes of this clause, if:

(a) a debtor is under an obligation to pay or repay an amount (in this subclause called the principal amount) to another person (in this subclause called the creditor); and

(b) the principal amount is not the whole or a part of the amount of a loan; and

(c) after the due date for payment or repayment of the principal amount, the whole or part of the principal amount remains unpaid;

the following provisions have effect:

(d) the creditor is taken, immediately after the due date, to have made a loan (in this clause called the notional loan) of the principal amount to the debtor;

(e) at any time when the debtor is under an obligation to repay any part of the principal amount, the debtor is taken to be under an obligation to repay that part of the notional loan;

(f) the notional loan is taken to have been made:

(i) if interest accrues on so much of the principal amount as remains from time to time unpaid — at the rate of interest at which that interest accrues; or

(ii) in any other case — at a nil rate of interest.

(3) Subject to subclause (4), a loan is a deferred interest loan if interest is payable on the loan at a rate that exceeds nil.

(4) A loan is not a deferred interest loan if:

(a) the whole of the interest is due for payment within 6 months after the loan is made; or

(b) all of the following conditions are satisfied:

(i) interest on the loan is payable by instalments;

(ii) the intervals between instalments do not exceed 6 months;

(iii) the first instalment is due for payment within 6 months after the loan is made.

(5) For the purposes of this clause, if the provider makes a deferred interest loan (in this subclause called the principal loan) to the recipient, the following provisions apply:

(a) the provider is taken, at the end of:

(i) the period of 6 months beginning on the day on which the principal loan was made; and

(ii) each subsequent period of 6 months;

to have made a notional loan to the recipient;

(b) the amount of the loan is taken to be equal to the amount by which the interest (in this subclause called the accrued interest) that has accrued on the principal loan in respect of the period exceeds any amount paid in relation to the accrued interest before the end of the period;