2.4 Deductible interest

Total income – qualifying interest paid = Net income

? Deductible interest is given tax relief by being deducted from total income to compute net income (before the deduction of PA)

? Deduction sequence: 1) Non-savings income 2) Savings income 3) Dividends income

? Unused amount this year: wasted

Qualifying purposes for deductible interest

? Loan to buy plant or machinery for partnership use

? Loan to buy plant or machinery for employment use

? Loan to buy interest in employee-controlled company

? Loan to invest partnership

? Loan to invest in a co-operative