Deduction of accrued interest on debentures
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FOI status:May be releasedFOI number: I 1102773
In Alliance Holdings Ltd v FC of T 81ATC 4637; 12 ATR 509; Woodward J. of the Supreme Court of NSW held that interest on certain long term debentures was deductible by the borrower under section 51(1) as it accrued, even though this was before it was due and payable.
2. While no appeal was lodged against this adverse decision, it has been decided, after further consideration, that there is sufficient doubt about the correctness of the decision to warrant the matter being tested before the Courts again. Another case involving AGC Advances Ltd, has been referred to the Supreme Court of NSW. It remains the view of this Office that interest is incurred for section 51(1) purposes only when it becomes due and payable.
COMMISSIONER OF TAXATION
NO 4/82/3571 F11
Date original memo issued: