Interest deductibility

This paper considers whether interest is deductible where a taxpayer borrows funds and the funds are not used directly in deriving the taxpayer's gross income or not used directly in the taxpayer's business which is carried on for the purpose of deriving the taxpayer's gross income.

Related documents

This issues paper was revised and resulted in the following issues paper:

IRRUIP 5: Interest deductibility in certain arrangements

About issues papers

Inland Revenue’s Tax Counsel Office (Public Advice and Guidance) develops and publishes public statements interpreting the tax laws.

Where significant uncertainty exists, it helps us to hear from interested parties before we prepare a public statement. This generates discussion so we gain a better understanding of the issues, including practical concerns. An issues paper sets out our initial views on how the relevant tax laws may apply. If it results in the issue of a draft public statement, public consultation will occur in the usual manner.

Given that issues papers produced by the Tax Counsel Office represent our initial views only, taxation officers, taxpayers and practitioners must not rely on them. Only finalised public statements represent authoritative statements by Inland Revenue of its stance on the issues covered. 

Any views presented in an issues paper do not change the Commissioner’s current position or practices.

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