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  • Interest expenses overseas


    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Did you incur interest as a business expense on money borrowed overseas?

    No, Go to Depreciation expenses.

    Yes, Read on.

    You need to know

    Include any interest incurred on money borrowed from overseas sources to acquire income-producing assets used in your business, to finance business operations or to meet current business expenses.

    Do not include interest incurred in deriving rental income. Claim this at item 20 on your tax return (supplementary section).

    Generally, an amount of withholding tax is required to be withheld from interest paid or payable to non-residents and from interest derived by a resident through an overseas branch. These amounts must be sent to the ATO.

    If you paid or credited any interest or amounts in the nature of interest to a non-resident of Australia or to a resident's overseas branch, you will need to provide additional information. Print Schedule of additional information - item 14 on the top of a separate piece of paper. Show the name and address of each recipient, total amounts paid or credited to each non-resident or overseas branch of a resident and the amount of tax withheld. If no tax was withheld, please state the reason for this. Include your name, address and TFN. Print X in the Yes box at Taxpayer's declaration question 2a on your tax return. Sign and attach the schedule to page 3 of your tax return.

    For more information on the tax treatment of interest and dividends paid to non-residents, phone the Business Infoline on 13 28 66.

    Note: If you include an amount of interest which is not allowable as a deduction, such as amounts denied by the thin capitalisation rules, you will need to add back the amount at H Expense reconciliation adjustments in the Reconciliation items section on your schedule. More information on thin capitalisation is available.

    Completing this item

    Step 1, Write your total primary production overseas interest expenses at Interest expenses overseas in the Primary production column, item P8 on page 3 of your schedule. Do not show cents.

    Step 2, Write your total non-primary production overseas interest expenses at Interest expenses overseas in the Non-primary production column. Do not show cents.

    Step 3, Add up your primary production and non-primary production overseas interest expenses and write the total at R.

    Last modified: 01 Sep 2006QC 18499