PR 2017/3 – Interest linked to CPI remains non-deductible if used to fund the purchase of a home loan (which is obvious) but changes in total rate of interest on refinancing is not assessable or deductible

On Wed 19.4.2017, the ATO released Product Ruling PR 2017/3 concerning the income tax consequences for a borrower being charged an “Indexed Rate” of interest under a home loan. The ATO says the interest incurred by the borrower at the Base Rate under a home loan used to fund the acquisition of the borrower’s principal place of residence, or to refinance an existing loan used for that purpose, will not be deductible under s 8-1 of the ITAA 1997.

The Ruling applies from 19 April 2017 to 30 June 2019.

[LTN 72, 19/4/17]