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Rob - Yes a wise view of not blindly assuming that because it is a business that the interest is deductible. I do encourage IO loans for business tax borrowings to avoid capitalising issues. I recently saw a capitalised interest problem where ATO denied all the deduction in what would...

Doh ! Its my annual July "paying your tax using borrowings" article....I trust my comments reflect theirs....I haven't recd it yet. My emphasis is always upon meeting the business test - Which'then doesn't exist.

A common question I'm always asked is "Can I claim a deduction for borrowings to pay my income tax bill?" It depends. The question of when interest incurred on borrowings used to pay a tax bill as a deduction came up for a Ruling in 1920, 1951 and even as recent as 1990 (IT 2582). The 1990...