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

Penalty interest deductibles

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:

Business
advice

taxation
planning

compliance
services

News

SMSF rollovers in SuperStream to be deferred

July 15, 2019

The 2019-2020 Federal Budget suggested a deferral of the extension of SuperStream to self-managed superannuation fund (SMSF) rollovers from 30 November 2019 to 31 March 2021. The commencement of this deferral has recently been confirmed by the government.

The deferral will coincide with the $19.3 million that will be provided to the Australian Taxation Office (ATO) over three years from 2020-21, enabling electronic requests to be sent to superannuation funds for the release of money required under a number of superannuation arrangements.

With the combined date for both bringing electronic release authorities into SuperStream and allowing SMSF rollovers, changes needed to update SuperStream will only need to be undertaken once. The deferral aims to reduce administrative costs for funds and allows for a more integrated design of SuperStream.

First introduced in 2015, SuperStream is a government standard for processing superannuation payments electronically in a streamlined manner. Currently, SuperStream can only process rollovers between two APRA funds electronically but with the change will see this process extend to SMSFs.

Regulations for the deferral to put into effect will be made promptly.