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Amendment of section 122 (preferential loan arrangements) of Principal Act.
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5.—Section 122 of the Principal Act is amended, as respects the year of assessment 2001 and subsequent years of assessment, by the substitution in the definition of “the specified rate” in paragraph (a) of subsection (1) of—
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(a) “6 per cent” for “4 per cent” in both places where it occurs, and
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(b) “12 per cent” for “10 per cent”,
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and the said definition, as so amended, is set out in the Table to this section.
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TABLE
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“the specified rate”, in relation to a preferential loan, means—
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(i) in a case where—
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(I) the interest paid on the preferential loan qualifies for relief under section 244, or
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(II) if no interest is paid on the preferential loan, the interest which would have been paid on that loan (if interest had been payable) would have so qualified,
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the rate of 6 per cent per annum or such other rate (if any) prescribed by the Minister for Finance by regulations,
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(ii) in a case where—
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(I) the preferential loan is made to an employee by an employer,
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(II) the making of loans for the purposes of purchasing a dwelling house for occupation by the borrower as a residence, for a stated term of years at a rate of interest which does not vary for the duration of the loan, forms part of the trade of the employer, and
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(III) the rate of interest at which, in the course of the employer's trade at the time the preferential loan is or was made, the employer makes or made loans at arm's length to persons, other than employees, for the purposes of purchasing a dwelling house for occupation by the borrower as a residence is less than 6 per cent per annum or such other rate (if any) prescribed by the Minister for Finance by regulations,
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the first-mentioned rate in subparagraph (III), or
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(iii) in any other case, the rate of 12 per cent per annum or such other rate (if any) prescribed by the Minister for Finance by regulations.
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