Income tax - Deductibility of expenditure incurred in borrowing money - section DB 5

This Interpretation Statement considers the application of section DB 5, which provides for the deductibility of expenditure incurred in borrowing money for use as capital in deriving income. It considers the relationship between section DB 5 and the financial arrangements (FA) rules, and looks at when borrowing costs may be deductible under section DA 1 (the general deductibility provision). The transitional operational statement outlines an approach that will enable taxpayers who have already entered into certain arrangements some time to transition into the expected treatment.