Income Tax Act 2007 section 883

Interest on loan to buy life annuity

Section 883 provides an exception from the duty to deduct income tax at source for interest payments on loans used to buy a life annuity, where those payments are already subject to a separate tax deduction regime.

• This section creates an exception to the general duty to deduct income tax at source from payments of yearly interest under section 874.
• The exception applies specifically to interest on a loan taken out to purchase a life annuity.
• Such interest payments are instead dealt with under a separate regime (section 369 of ICTA), which already provides for tax to be deducted at source.
• The purpose of this exception is to prevent a double deduction of tax arising from the overlap of two separate withholding tax regimes.