Interest on borrowed capital - Section 36(1)(iii)

Interest on borrowed capital deduction limited where capital used to acquire assets until asset is first put to use.

Interest on borrowed capital is deductible if the money was borrowed by the assessee for business purposes and interest was actually paid; interest on capital borrowed to acquire a new asset must be capitalised until the asset is first put to use. Payments lacking a real borrowing obligation, interest on own capital or intra-unit transfers, guarantee-related payments, and interest related to tax liabilities are generally not allowable; brokerage for arranging loans is not deductible under this provision but may be allowable as a business expense elsewhere.