Section 29: Interest
142.This section sets out the basic rule that interest is of a revenue nature. It is based on section 74(1) of ICTA.
143.Section 74(1)(f) of ICTA provides that in computing the profits of a trade:
no deduction is allowed in respect of any capital withdrawn from or employed, or intended to be employed, as capital in the trade; but
the prohibition of any deduction in respect of capital should not be construed as disallowing the deduction of interest.
144.This section rewrites the second of these propositions by providing that for the purpose of calculating the profits of a trade, all interest is of a revenue nature.
145.The question of whether interest is deductible in arriving at the trade profits falls to be determined according to whether the interest meets the general criteria for the deduction of an expense of a revenue nature in calculating the profits of a trade.
