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Edited version of private advice
Authorisation Number: 1052124432928
Date of advice: 2 June 2023
Ruling
Subject: Deductions- interest
Question 1
Is the interest charged by the bank for the portion of the loan associated with income-generating activities tax deductible?
Answer
Yes. The interest can be claimed as a deduction for losses and outgoings if incurred in gaining or producing assessable income.
This ruling applies for the following period
30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You currently have a home loan that has a redraw facility.
You run a business as a sole trader. You will be taking time off in the relevant year but will have several business expenses as you have hired a contractor handle your work.
You would like to withdraw an amount to pay off existing debt due to business expenses, with possible additional withdrawals later.
As a result of making this withdrawal the interest on the loan will increase.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1