CT return Part 2 - 8 Loan Relationships

Question 1

What is a loan relationship?

How is it taxed?

Answer 1

1) Money debt arising from
2) lending money

Examples: Borrowing, depositing, lending of money. Money doesn’t have to ” change hands “, it could be a loan not

Regardless of whether the loan relationship is capital or revenue in nature, profits and possesses from loan relationships are taxed or relieved as income

Eg. Interest incurred from a trading loan relationship is an allowable expense

Question 2

What’s a non-trade loan relationship?

Answer 2

Transaction does not have a trade purpose and money is lent

Question 3

After pooling the non-trading credits and debits, there is a net surplus of credits what does this mean?

Answer 3

Surplus is a non-trading profit and charged as income

Question 4

What’s a trade loan relationship?

Example?

Answer 4

Where there’s a trade purpose

They are treated as part of trading profit or loss for tax purposes