Hello,
this question is not about the prime eligibility of capitalized interest being a valid business expense, as I believe it can be depending on the circumstances of interest incurred, but on the issue of when the expense is claimed.
Question is, if you capitalize interest on a loan account within a financial year, then as you have not made a payment for the expense how can you claim an expense deduction? Later when you start repaying interest? I hypothesize that the increase of your loan debt by the capitalized interest amount is considered equivalent by ATO to an expense event charged and paid by the fact that your loan balance has increased, i.e.; you have paid for the interest by the fact the interest is capitalized.
Thanks for any clarifying response
this question is not about the prime eligibility of capitalized interest being a valid business expense, as I believe it can be depending on the circumstances of interest incurred, but on the issue of when the expense is claimed.
Question is, if you capitalize interest on a loan account within a financial year, then as you have not made a payment for the expense how can you claim an expense deduction? Later when you start repaying interest? I hypothesize that the increase of your loan debt by the capitalized interest amount is considered equivalent by ATO to an expense event charged and paid by the fact that your loan balance has increased, i.e.; you have paid for the interest by the fact the interest is capitalized.
Thanks for any clarifying response