In most instances, a company's financing income and expenses are taxed or relieved under the loan relationships regime. There are several different sets of rules governing the amount and timing of the tax deductions which are available. However, additional restrictions have been proposed which will apply to a wide range of interest and interest-like transactions such as:
- most loan relationship debits
- some derivative contract debits
- the finance cost element of certain arrangements or transactions involving finance leasing, debt factoring or service concession arrangements
CTA 2009, Part 5
The legislation in this area uses the term 'tax-interest expense' to include all the financing costs listed above. For simplicity, the term 'interest' is used in this guidance note. TIOPA 2010, s 382
This guidance note describes in outline the main concepts and features of the restrictions.