CALL US: (07) 3367 0999 | EMAIL US:

About us

Firm history:

Salomone Accountants was founded by Joe Salomone who manages and steers the practice.

Joe Salomone has 20 years experience in accounting and his loyal clients continue to follow him from all over Brisbane and Australia.

Business
advice

taxation
planning

compliance
services

News

Penalty interest deductibles

June 24, 2019

The ATO has recently replaced the Taxation Ruling (TR) 93/7W on whether penalty interest is deductible to the new TR 2019/2. This new ruling highlights the circumstances in which penalty interest is deductible and the situations where it is not.

“Penalty interest” refers to an amount charged by a lender to a borrower under a loan agreement if instalments are not paid. The payable amount is then calculated by reference to a number of months of interest that would have been received.

TR 2019/2 says that penalty interest is generally deductible under section 8-1 where:

Penalty interest that is incurred to discharge a mortgage is also deductible under section 25-30, to the extent that borrowed funds were used to produce assessable income. The ATO makes a note that unlike the general deduction provisions, there’s no influence from the expense being capital or revenue in nature.

You cannot deduct a loss or outgoing under section 8-1(2) to the extent that: