Private ruling: Deductions- interest
Date of advice: 2 June 2023
Published: 24 July 2023
Ruling period: 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the interest charged by the bank for the portion of the loan associated with income-generating activities tax deductible? | A1: Yes. The interest can be claimed as a deduction for losses and outgoings if incurred in gaining or producing assessable income.

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