Who can claim
This deduction is available to individuals and companies.
- The financing cost is a debt deduction connected with producing assessable income and is not claimed at another label.
- The taxpayer has applied any relevant thin-capitalisation and debt-deduction-creation rules.
What you cannot claim
- Do not claim private interest, principal repayments or an amount denied by a thin-capitalisation or integrity rule.
- Do not duplicate rental, business or investment interest already claimed elsewhere.
How the amount is worked out
Start with the otherwise deductible financing cost, then apply use-of-funds apportionment, thin-capitalisation limits and debt-deduction-creation exclusions.
Records the ATO expects
- Loan agreements
- Use-of-funds tracing
- Related-party records
- Thin-capitalisation calculation
Where this rule comes from
Primary source: Income Tax Assessment Act 1997 Division 820 (Compilation 266 in force 1 July 2026). Reviewed 30 July 2026. Covers the 2025-26 and 2026-27 income years.