| Disclaimer You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1052116817608
Date of advice: 12 May 2023
Ruling
Subject: Deductions - interest expense
Question
Are you entitled to claim a deduction for the interest expense you incur on the loan used to purchase Exchange Traded Funds (ETFs) under section 8-1 of the Income Tax Assessment Act 1997?
Answer
Yes.
It is accepted that each of you incur interest expenses on a loan facility that you use to acquire ETFs in your individual names.
As you receive assessable income from the ETFs the interest expense that you incur is a deductible expense.
Further information about interest, dividend and other investment income deductions can be found by searching 'QC 72187' on ato.gov.au
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on:
XX January 20XX
Relevant facts and circumstances
Person A and Person B (You) have invested in the share market over a number of years across a mix of ETFs, Listed Investment Companies and individual shares. The purchases were not funded by a loan.
Having reviewed your investment strategy, some of these investments will be sold, resulting in a capital gain.
You invest approximately $X per month in new share purchases.
To assist you with the purchases, You have established a home loan facility for the amount of $1X! structured as follows:
Loan Account 1 $X!
Loan Account 2 $X!
Loan Account 3 $X!
Loan 2 has an interest only period of 3 years. The funds from Loan 2 will be used by Person B to invest in ETFs that are placed in Person B's name alone.
Loan 3 has an interest only period of 3 years. The funds from Loan 3 will be used by Person A to invest in ETFs that are placed in Person A's name alone.
The ETFS pay quarterly dividends.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
