Document ID: chunk:federal_register_of_legislation:C2010C00715:clause:1_5
Version: federal_register_of_legislation:C2010C00715
Segment Type: clause
Provision Reference: sch 1 cl 5
Character Range: 173805–175101

5  After section 26‑20
Insert:

26‑25  Interest or royalty

 (1) You cannot deduct under this Act a payment of interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936) or a *royalty if:
 (a) you are required to withhold an amount from the interest or royalty under Division 12 in Schedule 1 to the Taxation Administration Act 1953; and
 (b) either:
 (i) you fail to withhold the amount; or
 (ii) after withholding the amount, you fail to comply with section 16‑70 in that Schedule in relation to that amount.

 (2) You cannot deduct under this Act a payment of interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936), or a *royalty, that is in the form of a *non‑cash benefit if:
 (a) you are required to pay to the Commissioner an amount under section 14‑5 or 14‑10 in Schedule 1 to the Taxation Administration Act 1953 for that payment; and
 (b) you fail to do so.

 (3) If:
 (a) apart from subsection (1) or (2), you can deduct a payment of interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936) or a *royalty, for an income year; and
 (b) the *withholding tax payable for the interest or the royalty is paid;
you can deduct the interest or royalty for that income year.