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Tax deductability of interest

Published on 01 Jan 99 by WESTERN AUSTRALIAN DIVISION, THE TAX INSTITUTE

The cost of interest, whatever it secures, is fundamentally the time cost of money and does not itself represent a lasting or enduring asset. The payment for goods, land, shares, trading stock, etc. will usually result in the conversion of the money paid into an asset : the asset represents the money which it replaces and may, at least in principle, be converted back into money. That is not the case with interest : it is paid for the time use of capital and, like time itself, disappears. Interest is the paradigm example of a revenue expense.

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Tony PAGONE QC
Justice Tony Pagone was appointed as a Judge of the Supreme Court of Victoria in May of this year, having previously held a position at the Court in 2001-2002. Prior to his recent appointment he was a Queens Counsel at the Victorian Bar, specialising in taxation law and also practising widely in commercial law. He held the position of Special Counsel to the Australian Taxation Office and was the President of the Tax Bar Association.
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