Part D
Deductions
Interest incurred in relation to certain land
DH 8Deduction not allowed
A person is denied a deduction for interest if and to the extent to which the interest is—
- incurred for disallowed residential property, but excluding interest for a grandparented transitional loan:
- grandparented residential interest:
- incurred to acquire an ownership interest in, or become a beneficiary of, an interposed residential property holder:
- incurred to refinance a loan, interest for which is described in paragraph (a) or (c).
The amount of the deduction denied for interest described in subsection (1) is limited to the following percentage for the following period:
The following table is small in size and contains 2 columns. Column 1 is headed Period that interest is incurred. Column 2 is headed Percentage denied. Period that interest is incurred Percentage denied 1 April 2024 – 31 March 2025 20% The amount of the deduction denied for interest (the interest) incurred as the owner or to become an owner of an interposed residential property holder that is a close company is limited, for an income year, to the amount calculated quarterly using the following formula and summed for the entire income year:
Where:
In the formula in subsection (3)—
- interposed interest is the interest, to the extent to which it is incurred in the relevant quarterly calculation period:
- quarterly interposed residential property percentage is the interposed residential property percentage for the interposed residential property holder, calculated, as described in section DH 6, at the end of the relevant quarterly calculation period:
- denial percentage is the percentage denied in the table in subsection (2) for the period.
Notes
- Section DH 8: inserted (with effect on 27 March 2021), on , by section 75 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
- Section DH 8(2) heading: replaced, on , by section 47(1) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
- Section DH 8(2): replaced, on , by section 47(1) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
- Section DH 8(3) formula: amended, on , by section 47(2) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
- Section DH 8(4)(c): inserted, on , by section 47(3) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).