Income Tax Act 2007

Deductions - Specific rules for expenditure types

DB 8: Interest: money borrowed to acquire shares in group companies

You could also call this:

"Interest on money borrowed to buy shares in related companies can be tax deductible."

You can get a deduction for interest on money borrowed to buy shares in another company in your group. This applies if the two companies are in the same group at the end of the tax year. You can also get a deduction if you buy shares in a company that stops existing because of an amalgamation. If you borrow money to buy shares in another company, you might be able to claim the interest as a deduction. However, some other rules might override this, such as rules about motor vehicles or certain assets. For example, Section FM 12 might apply if you are part of a consolidated group. Some other rules can override this section, like Subpart DE for motor vehicle expenditure or Subpart DG for expenditure related to certain assets. Additionally, Subpart DH can override this section for interest related to certain land. This section is part of the general rules about deductions, and it overrides some other limitations, but other limitations still apply.

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This page was last updated on 29 January 2026 — View changes

Topics:

Money and consumer rights > Taxes

DB 7: Interest: most companies need no nexus with income, or

"Most companies can claim interest as a tax deduction without it being related to their income."

DB 9: Interest incurred on money borrowed to acquire shares in qualifying companies, or

"Tax deductions for interest on loans to buy shares in certain companies"

Part DDeductions
Specific rules for expenditure types

DB 8Interest: money borrowed to acquire shares in group companies

A company is allowed a deduction for interest incurred on money borrowed to acquire shares in another company that is part of the same group of companies.
Subsection (1) does not apply if the 2 companies are not part of the same group of companies at the end of the tax year that corresponds to the income year in which the deduction is allowed.
A company is allowed a deduction for interest incurred on money borrowed to acquire shares in another company that has ended its existence on a resident’s restricted amalgamation.
Subsection (3) does not apply if the 2 companies were not part of the same group of companies immediately before the resident’s restricted amalgamation.
Subsection (3) applies in the income year in which the resident’s restricted amalgamation occurs and in later income years.
Section FM 12 (Expenditure when deduction would be denied to consolidated group) may apply to allow a deduction under this section to a company that is part of a consolidated group.
Subpart DE (Motor vehicle expenditure) overrides this section for expenditure to which that subpart relates, if a company is a close company that has chosen to apply that subpart instead of the FBT rules, in accordance with section CX 17(4B)(c) (Benefits provided to employees who are shareholders or investors).
Subpart DG (Expenditure related to use of certain assets) overrides this section for expenditure to which that subpart relates.
Subpart DH (Interest incurred in relation to certain land) overrides this section for interest to which that subpart relates.
Repealed
This section supplements the general permission and overrides the capital limitation, the exempt income limitation, and the withholding tax limitation. The other general limitations still apply.

Compare

2004 No 35 s DB 8

Notes

Section DB 8(6BA) heading: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 70(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section DB 8(6BA): inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 70(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section DB 8(6B) heading: inserted (with effect on 1 April 2013 and applying for the 2013–14 and later income years), on 17 July 2013, by section 26(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section DB 8(6B): inserted (with effect on 1 April 2013 and applying for the 2013–14 and later income years), on 17 July 2013, by section 26(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section DB 8(6C) heading: inserted (with effect on 27 March 2021), on 30 March 2022, by section 64 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section DB 8(6C): inserted (with effect on 27 March 2021), on 30 March 2022, by section 64 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section DB 8(7) heading: repealed (with effect on 30 June 2009), on 6 October 2009, pursuant to section 71(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section DB 8(7): repealed (with effect on 30 June 2009), on 6 October 2009, by section 71(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section DB 8 list of defined terms close company: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 70(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section DB 8 list of defined terms FBT rules: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 70(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).