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Edited version of your written advice
Authorisation Number: 1012823101606
Date of advice: 15 June 2015
Ruling
Subject: Interest income from overseas
Question 1
Is the interest income received from overseas assessable income?
Answer
Yes.
Question 2
Are you required to withhold PAYG amounts from the payments received?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2015
The scheme commenced on
The scheme has commenced
Relevant facts
Entity A provides business loans.
The business has just taken on an overseas loan from country A and is receiving interest income from overseas.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
Ordinary assessable income
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources during the income year. Ordinary income has generally been held to include interest income.
Therefore the interest income derived from country A is assessable income.
PAYG instalments
The Pay As You go (PAYG) instalments system is designed to ensure the efficient collection of income tax. The system requires most taxpayers to pay a quarterly/annual or monthly instalment based on the instalment income derived during the relevant period. Instalment income includes interest income.
Therefore where the business is deriving interest income a liability to pay PAYG instalments may arise.
No other taxes are payable in relation to the interest income derived from country A under the Income Tax Assessment Act 1936 or ITAA 1997.