Interest deductibility - Public Trustee V CIR

This interpretation statement expresses the Commissioner's view of the principles relating to interest deductibility from the Court of Appeal decision in Public Trustee v CIR [1938] NZLR 436.

Note: comments in this interpretation statement have been superseded by IS 23/10: Deductibility of holding costs for land.  

The Commissioner no longer considers Pacific Rendezvous Ltd v CIR [1986] 2 NZLR 567 (CA) the authority for interest being fully deductible where all of the borrowed funds are used in an income earning activity, despite also having some other use – irrespective of the nature of that other use. He is now of the view that Pacific Rendezvous is not authority for interest being fully deductible where land is used both privately and for income-earning.