Income tax: is a deduction for borrowing costs allowable under section 67 of the Income Tax Assessment Act 1936 when a loan does not proceed?

Taxation Determination TD 93/48 explains that a deduction for borrowing costs incurred with a view to borrowing money is not allowed pursuant to section 67 of the Income Tax Assessment Act 1936 (ITAA 1936) where the loan does not proceed. Section 67 of the ITAA 1936 does not apply to expenditure incurred in the 1997-98 income year or later years of income.

Section 25-25 of the Income Tax Assessment Act 1997 (ITAA 1997), which applies from 1 July 1997, allows a deduction for expenditure incurred in borrowing money. In most cases the deduction is spread over the period of the loan (as defined). Section 25-25 of the ITAA 1997 makes it clear that you can deduct expenditure to the extent that you use the money for the purpose of producing income.

TD 93/48 is no longer current or necessary and is withdrawn.