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Tax deductability of interest

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Published on 01 Jan 99 by WESTERN AUSTRALIAN DIVISION, THE TAX INSTITUTE

The cost of interest, whatever it secures, is fundamentally the time cost of money and does not itself represent a lasting or enduring asset. The payment for goods, land, shares, trading stock, etc. will usually result in the conversion of the money paid into an asset : the asset represents the money which it replaces and may, at least in principle, be converted back into money. That is not the case with interest : it is paid for the time use of capital and, like time itself, disappears. Interest is the paradigm example of a revenue expense.

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Justice Gaetano Pagone
Tony has returned to practice as a barrister, after retiring from the Federal Court of Australia where he had been the national co-ordinating judge of the Taxation National Practice Area. Before his appointment to the Federal Court he was a judge of the trial division of the Supreme Court of Victoria and had been the judge in charge of the Commercial Court of that Court. He practised widely in taxation law, commercial law, administrative law, constitution law, public and human rights law during his career at the Bar. He was also Special Counsel to the Australian Taxation Office between 2002 and 2004. He is a professorial fellow of the Melbourne Law School and lectures in several post-graduate courses at the Melbourne Law School and from time to time in the Law Faculty at Monash University. He was the President of the International Association of Judges from October 2018 to September 2021 and had been on the board of the International Association of Tax Judges. - Current at 17 November 2021
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