(1) Work out the total amount incurred by the borrower under or in respect of the capital protected borrowing for the income year, ignoring amounts that are not in substance for capital protection or interest.
Example: Amounts that would be ignored under subsection (1) include amounts that are in substance the repayment of a loan or credit, the payment of an application fee or brokerage commission and the payment of stamp duty or other tax.
(2) The amount that is reasonably attributable to the capital protection for the income year is this percentage of the total amount incurred for the income year:
(a) 40% if the term is 1 year or shorter; or
(b) 27.5% if the term is longer than 1 year but not longer than 2 years; or
(c) 20% if the term is longer than 2 years but not longer than 3 years; or
(d) 17.5% if the term is longer than 3 years but not longer than 4 years; or
(e) 15% if the term is longer than 4 years.
Table of sections
247-75 Post-July 2007 capital protected borrowings
247-80 Capital protected borrowings in existence on 1 July 2013
247-85 Extensions and other changes