Interest on late payments of taxes or interest charged on underpaid tax following the amendment of an assessment (see 13.5.) is a deductible expense. Equally deductible are penalty interest payments made under loan agreements (e.g. on early loan repayments) where the future interest payments under the loan would have been deductible.
However, no deduction is allowed for both tax and nontax penalties, fines and other expenses that have been incurred as a result of the commission of an offence under the tax or non-tax law of Australia or a foreign country.