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Client Information Newsletter - July

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04 July 2019

Penalty interest can be deductible, under specific conditions

A new ruling has been released by the ATO on the deductibility or otherwise of "penalty interest". The term penalty interest refers to an amount payable by a borrower  under a loan agreement when the lender agrees to an early repayment of a loan. The amount payable is commonly calculated by reference to the number of months of interest payments that would have been received but for the early payment.

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