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Inland Revenue

Tax Policy

Mixed-use assets – interest expenditure

Clauses 91 to 93



As presently drafted, the proposed amendments to section DG 11 would seem to result in some overlap of the apportionment and limitation rules, so far as interest expenditure is concerned.  The proposed amendments to section DG 11 appear to provide a self-contained set of apportionment and limitation provisions for interest expenditure when mixed-use assets are owned by certain close companies.  Yet the general section DG 9(2) apportionment formula would still apply and would still include interest as part of the “expenditure” item.  We assume no such element of double limitation is intended.


The submitter has correctly identified the intended interaction between the proposed new formula for interest expenditure apportionment in section DG 11(3B), and the current formula in section DG 9(2), in that there should be no double limitation.

Officials agree that this aspect of the drafting should be clarified.


That the submission be accepted.