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Taxation Determination

TD 94/80

Income tax: is an investor who borrows to fund the purchase price of infrastructure borrowings, entitled to a deduction under subsection 51(1) of the Income Tax Assessment Act 1936 for any interest incurred by the investor for that purpose?

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FOI status:

may be releasedFOI number: I 1217846

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. Interest derived from infrastructure borrowings is tax exempt. Section 159GZZZZF ensures that an investor can have deductions for interest incurred on funds borrowed for the purpose of investing in infrastructure borrowings, as if the interest derived from infrastructure borrowings were not exempt.

2. The extent to which interest paid by an investor on a loan used for the full purchase price of infrastructure borrowings will be tax deductible depends on an investor's particular circumstances. In order for the interest to be deductible the investor must have entered into the loan solely for the purpose of funding the investment in or acquisition of the infrastructure borrowings. One indicator that the investor had a purpose other than, or in addition to, funding the infrastructure borrowings would be where the deductions in relation to the infrastructure borrowings are greater than the exempt return on the infrastructure borrowings grossed up by the investor's marginal tax rate as it would be but for the infrastructure borrowing investment and any related income and deductions.

Commissioner of Taxation
6/10/94

Previously issued as Draft TD 94/D56

References

ATO references:
NO Public Infrastructure Unit DTD/18; 94/6862-5

ISSN 1038 - 8982

Subject References:
infrastructure borrowings;
public infrastructure projects

Legislative References:
ITAA 159GZZZZF

TD 94/80 history
  Date: Version: Change:
You are here 6 October 1994 Original ruling  
  7 December 2016 Withdrawn  

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