Private ruling: Deductions
Date of advice: 12 February 2026
Published: 30 March 2026
Ruling period: 1 July 20XX to 30 June 20XX
Date scheme commenced: DD MM YYYY

Ruling: Q1: Is the establishment fee of $XXX incurred for the now closed loan facility fully deductible in the 20XX income year under section 25-25 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes . The loan establishment fee of $XXX is fully deductible in the 20XX income year as the whole Property was used for income producing purposes and the loan began and was repaid within the 20XX income year. | Q2: Are Individual A and Individual B able to deduct the interest expense incurred each year on the loan used to purchase the Pool under section 8-1 of the ITAA 1997 when it is leased? | A2: Yes. Individual A and Individual B able to deduct the interest expense incurred each year on the loan used to purchase the Pool as it being used for income producing purposes.

Relevant facts and circumstances: 1. Individual A and Individual B purchased a property in partnership (Property). The Property was purchased with income producing purposes. 2. The Property settled on DD MM YYYY. 3. The Property contains a house rented out to tenants (House), and a pool that is leased (Pool). 4. The House is rented for $XXX per week. 5. The Pool is rented for $XXX per year, including GST. 6. On DD MM YYYY, Individual A and Individual B borrowed $XXX at X% interest with an establishment fee of $XXX from Bank A (Loan A) to fund the purchase of the Property. The loans were proportional with the rental income with X% for the Pool and X% for the House. 7. Loan A used to purchase the Property was split into two loans. 8. On DD MM YYYY, Individual A and Individual B refinanced the loan with Bank B (Loan B) at X% interest with a $XXX establishment fee. Loan B used to purchase the Property was also split into two loans. 9. Individual A and Individual B plan on moving into the House whilst continuing to rent the Pool.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 25-25 | Income Tax Assessment Act 1997 section 8-1