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Q&A: Funding discretionary trust distributions; deductibility of interest


The Commissioner has issued a final ruling TR 2003/9 on the deductibility of interest incurred by a trustee on borrowed funds used to pay distributions to beneficiaries.

In this article we focus on its application to trustees of discretionary trusts. Where the trust has fixed entitlements and all of the trust's activities are income earning, the Ruling confirms that the interest should be deductible.

Author profiles

Keith James CTA
Keith is a Consultant at Hall and Wilcox within the Taxation group. He has been a key figure in the tax advisory profession for many years. Keith was a member of the original Breakfast Club organising committee, and was actively involved in its development for many years. From 2004, Keith was a member of the Board of Taxation for 10 years and during the last four he was the Deputy Chair of the Board. His involvement has also extended to Chairman of the Public Accountants Committee, Victorian President, National Councillor, Chairman of the Taxation Centre of Excellence and member of the National Tax Advisory Committee for CPA Australia. For many years Keith was a member of The Tax Institutes Victorian and National Education Committees. In October 2008, he was awarded a Meritorious Service Award by the Institute. Keith has had extensive experience in the construction and development fields, and he is also a director of Dennis Family Holdings. - Current at 16 November 2016
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Graham is a Solicitor at Hall & Wilcox Lawyers.
Current at May 2005
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