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1.Interest on Partner's Capital @18%.2.Interest on Partner's Loan @18%.3.Both Interest on Partner's Loan @18% & Interest on Partner's Capital @18%.4.None of these.
.Interest on Partner's Capital @18%
The anser is 1. Interest on Partner's Capital @18%
1. interest on partner capital
S34 Income Tax (Trading and Other Income) Act2005
You should disallow interest on partners' capital accounts. This interest is an allocation or distribution of profit to a proprietor.
If a partner advances money on loan to his firm for the purposes of the business, the interest payable is allowable as an interest expense to the business and is chargeable as interest on the partner.
