Income Tax Act 2007 section 809ZG

Tax relief schemes and arrangements

Section 809ZG denies income tax relief on interest payments where the underlying transaction forms part of a scheme or arrangement whose sole or main purpose is to obtain a tax reduction.

• No relief is available under the Income Tax Acts for interest payments connected to a tax relief scheme or tax relief arrangements, regardless of whether the scheme or arrangements were put in place before or after the transaction itself.
• A scheme or arrangement qualifies as a "tax relief scheme" or "tax relief arrangement" if the sole or main benefit the person could expect from the transaction is a reduction in their tax liability through relief under the Income Tax Acts.
• The definition of "relief" for these purposes covers both a deduction in calculating profits or gains, and a deduction or set-off against income.
• The provision is an anti-avoidance measure targeting transactions where interest payments are structured primarily to generate a tax benefit rather than to serve a genuine commercial purpose.