Indirect loans to participators

When intra-group loans are made within a close company group, and the loans are used to make payments to individual participators, there is a risk that the indirect loan to participator rule applies. Companies will therefore want to closely examine the provisions. Where the payment does not result in an individual becoming a debtor, a purposive interpretation may lead to the conclusion that the rule does not apply. The close company may further determine the rules are not on point, when viewed in light of the wider arrangements or, otherwise, when payments are made to mixed partnerships.