Prior to the Amendment
S DH 9 of the ITA currently overrides S DH 8 to deny all interest deductions on foreign currency loans in the following situations:
- Phasing out of deductions
Interest on a loan to fund to fund disallowed residential property (DRP) is denied under S DH 8. However, if it is grandparented residential interest, the interest deductions are phased out. S DH9 provides that, despite S DH8 deductions are denied for all interest on foreign currency loans. This was to ensure that phased-out deductions are not available for foreign currency loans due to the impact of fluctuations in foreign currency rates during the phasing-out period.
- Interposed Close Companies
Deductions are denied for interest incurred to acquire an interest in a close company that is an interposed residential company holder. The formula provided in S DH 8 (3) denies a portion of interest incurred by the shareholder in proportion to the amount of disallowed property held by the IRPH. There is no reason for S DH 9 to override this apportionment for a foreign currency loan and S DH 9 will be made redundant.
Amendments
The amendment repealed: Section DH 9 of the ITA.
Effective Date
The amendment repealed (with effect on 27 March 2021), on 31 March 2023.
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