Commonwealth Consolidated Acts

SOCIAL SECURITY ACT 1991 - SECT 1157G

  (1)   Subject to subsection   (1A), if a person (the provider ) makes a loan to another person (the recipient ), the making of the loan constitutes a loan benefit provided by the provider to the recipient.

  (1A)   The making of the loan does not constitute a loan benefit provided by the provider to the recipient if:

  (a)   the provider is the Defence Force, or a body one of the objects or functions of which is making loans to employees of the Defence Force; and

  (b)   the recipient is an employee of the Defence Force.

Late payment of debt

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

  (a)   a person (the debtor ) is under an obligation to pay or repay an amount (the principal amount ) to another person (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 (the deemed 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 deemed loan;

  (f)   the deemed 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 subsection   (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 section, if a person (the provider ) makes a deferred interest loan (the principal loan ) to another person (the recipient ), the following provisions apply:

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

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

  (ii)   each subsequent period of 6 months;

    to have made a loan (the deemed loan ) to the recipient;

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

  (c)   if any part of the accrued interest becomes payable or is paid after the time when the deemed loan is taken to have been made, the deemed loan is to be reduced accordingly;

  (d)   the deemed loan is taken to have been made at a nil rate of interest.

  (6)   Paragraph   (5)(a) only applies to a period of 6 months if the recipient is under an obligation during the whole of the period to repay the whole or a part of the principal loan.

  (7)   For the purposes of this Part, if no interest is payable in respect of a loan, a nil rate of interest is taken to be payable in respect of the loan.