Private ruling: Deductibility of interest expenses
Date of advice: 9 October 2025
Published: 24 November 2025
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for the interest paid on the loan used to purchase your investment property? | A1: Yes. Considering your circumstances, we accept the loan interest expenses are incurred in gaining or producing your assessable income and are not of a private nature. As such you are entitled to a deduction for the full amount of loan interest expenses under section 8-1 of the ITAA 1997.

Relevant facts and circumstances: You earn rental income from an investment property. You took out a loan to help finance the purchase of the property. The loan was only used to purchase the property and the funds were not used for any other purpose. In xx 20xx a specified amount was incorrectly deposited into your home loan account. The funds were intended to go into the offset account for that home loan. You contacted your bank via email on the same day the funds were incorrectly deposited into the home loan account to request this transfer be reversed. Over the following month you sent many emails and made several calls to the bank. Your bank did not complete the reversal of the transaction until xx 20xx. When the reversal occurred, a specified lesser amount was deposited into the offset account. You believe an amount was deducted for an overdue payment as you were making manual repayments whilst this transaction was being reversed. You provided a chain of emails between you and the bank over a specified time period. There have been no other amounts redrawn from the loan account.

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