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Interest Deductibility

Published on 12 Jun 2003 | Took place at Park Hyatt, Melbourne , VIC

Significant recent cases post Steele's case (notably, Spassked, Firth and Hart) and important Government announcements prompt this timely re-focus on the character of interest and the criteria for its deductibility.

This seminar explored the latest cases and judicial exposition of the rules for deductibility of funding costs, taxation and product rulings, and legislation.

Topics covered include:
- the characteristics of interest (revisited)
- the required connection(s) for deductibility
- start-up, cessation and apportionment issues
- applying the rules to exotic instruments, capital protected loans and split loans.

The aim of the seminar was to rigorously analyse the principles of interest deductibility, with an emphasis on real-time issues of current concern, and particularly their relevance to prepayments of financing costs at year-end.

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Individual sessions

Principles of Deductibility of Interest

Author(s):  Michelle GORDON This seminar paper outlines the principles and recent changes. Topics covered include:
- the characteristics of interest (revisited?)
- lessons from Broken Hill Pty Co Ltd
- 'use' as a required connection
- 'purpose' as a required connection
- whether Spassked changes the principle of Total Holdings
- areas of current ATO focus
- proposed legislation affecting deductibility.

Materials from this session:

Apportionment issues

Author(s):  Martin KEATING This seminar paper covers the following topics:
- comparing Ure, Ilbery, Firth and Hart
- when is it too soon to claim a deduction?...Anovoy and Steele
- when is too late to claim a deduction?...Brown and Jones.

Please note that this paper was also presented at the Interest Deductibility seminar held in Perth on 19 September 2003.

Materials from this session:

Applying the principles to exotic instruments

Author(s):  Michael SELTH This seminar paper covers the following topics:
- discounts
- capitalised interest
- split loans and capital protected loans
- interaction with new debt/equity rules
- hybrid equity
- perpetual notes and stapled securities
- unit trust financing arrangements.

Note that this paper was also presented by Russell Garvey at the Interest Deductibility seminar held in Perth on 19 September 2003.

Materials from this session: