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Interested in Interest? (Interest Deductibility)

Published on 21 Aug 2008 | Took place at Oaks on Collins, Melbourne, VIC

Most practitioners believe they have a good handle on the principles of interest deductibility. However, many developments have occurred in this area since landmark court cases were decided and it's easy to take for granted that you've got it covered. With interest rates on the rise, are you sure your client can claim an interest deduction?

Aimed at all practitioners who advise on financing arrangements for business entities and taxpayers in general, and other in-house tax advisors who have a responsibility for administering the income tax affairs of their company, partnership or trust, this event covered:

  • the principles determined in key court cases and their effect on interest deductibility
  • the debt/equity rules focusing on some of the current issues relevant to interest deductibility and likely developments, and
  • debt pricing, guarantee fees and transfer pricing.

Individual sessions

The fundamentals of interest deductibility

Author(s):  Helen FISHER,  Neil WARD,  Michael JENKINS,  Natalie WELLARD

This paper covers:

  • Fundamentals of Interest Deductibility
    • what is interest? (BHP Co and the debt/equity provisions)
    • is it too soon? (Steele's case)
    • is it too late? (Brown's case)
    • purpose/use (Macquarie Finance and St George cases)
    • refinancing (Smith & Roberts case)
    • derivation of income (Total Holdings and Spassked)
    • interest withholding tax
    • thin capitalisation.
  • Debt/equity
    • how do the Debt/Equity rules impact interest deductibility?
    • key issues
      • effective non-contingent obligations
      • timing
      • related schemes
      • limited recourse debt
      • convertible notes/hybrids
    • impact of recent cases including St George.
  • Debt pricing
    • transfer pricing and interest
    • guarantee fees and intra-group loans
    • an examination of the ATO's recent discussion paper.
Materials from this session: