Commonwealth Numbered Acts

INCOME TAX ASSESSMENT AMENDMENT ACT 1976 No. 50 of 1976 - SECT 11

11. After section 82KB of the Principal Act the following section is
inserted:- Interest deductible only if paid during first 5 years of loan
connected with first residence owned by taxpayer or his spouse.
''82KBA. (1) A deduction is not allowable under this Subdivision in respect of
an amount by way of interest paid by the taxpayer on or after 1 July 1976 in
respect of a loan connected with a dwelling used by the taxpayer as his sole
or principal residence if-

   (a)  another dwelling was used by the taxpayer as his sole or principal
        residence in Australia at a time before he commenced to use the
        first-mentioned dwelling as his sole or principal residence; and

   (b)  at the time mentioned in paragraph (a) the taxpayer, or a person who
        was the spouse of the taxpayer at that time, held a relevant interest
        in the other dwelling.

''(2) A deduction is not allowable under this Subdivision in respect of an
amount by way of interest paid by a taxpayer on or after 1 July 1976 in
respect of a loan connected with a dwelling to the extent (if any) that the
liability to pay that amount arose after the expiration of-

   (a)  in a case to which paragraph (b) does not apply-the period of 5 years
        commencing on whichever was the earlier of the following days:-

        (i)    the day on which the taxpayer first acquired a relevant
               interest in the dwelling; or

        (ii)   if another person who is or has been the spouse of the taxpayer
               holds or has held a relevant interest in the dwelling and that
               other person-

                (A)  acquired such an interest at a time when that other
                     person was the spouse of the taxpayer; or

                (B)  became the spouse of the taxpayer at a time when that
                     other person held such an interest,
the day on which that other person first acquired such an interest; or

   (b)  if the dwelling was or is first used by the taxpayer as his sole or
        principal residence in a year of income of the taxpayer later than the
        year of income of the taxpayer in which the earlier of the days
        mentioned in paragraph (a) occurred or occurs-the period of 5 years
        commencing on the first day of the year of income of the taxpayer in
        which the dwelling was or is first used by the taxpayer as his sole or
        principal residence.

''(3) A deduction is not allowable under this Subdivision in respect of an
amount by way of interest paid by a taxpayer on or after 1 July 1976 in
respect of a loan connected with a dwelling where, if the amount had been paid
by the spouse of the taxpayer, a deduction would not, by reason of sub-section
(1) or (2), have been allowable under this Subdivision in respect of the
payment.

''(4) For the purposes of this section-

   (a)  a person shall be deemed to hold or acquire a relevant interest in a
        dwelling if the person holds or acquires, whether alone or together
        with another person or other persons-

        (i)    a prescribed interest in the land on which the building
               constituting or containing the dwelling is constructed;

        (ii)   a prescribed interest in a stratum unit in relation to the
               dwelling; or

        (iii)  if the dwelling is a flat or home unit-a proprietary right in
               respect of the dwelling;

   (b)  a reference to the spouse of a taxpayer shall be construed as a
        reference to-

        (i)    the husband or wife of the taxpayer other than a person living
               separately and apart from the taxpayer; or

        (ii)   a person living with the taxpayer as the husband or wife of the
               taxpayer on a bona fide domestic basis although not legally
               married to the taxpayer; and

   (c)  an amount paid before 1 July 1976 on account of interest falling due
        on or after that date shall be taken to be paid at the time when it
        falls due and not at the time when it was in fact paid.''.