Income Tax Act 2007 section 383

Relief for interest payments

Section 383 sets out the conditions under which individuals can claim income tax relief for interest paid on certain qualifying loans, and explains how that relief is given.

• Relief is available for interest paid on loans used for specific qualifying purposes, such as buying plant or machinery for a partnership or employment, investing in a close company, an employee-controlled company, a partnership, or a co-operative, or paying inheritance tax.
• The amount of relief equals the eligible interest paid, and it is deducted when calculating the individual's net income for the tax year in which the interest is actually paid.
• Relief is subject to a number of restrictions, including general limits on the chapter's relief, restrictions where the cash basis applies, rules preventing double relief, and provisions about loans that only partly meet the qualifying requirements.
• If eligible interest exceeds the income from which it can be deducted, the excess relief is generally lost, except for interest on loans taken out to pay inheritance tax, where unused relief can be carried back or forward.