The tax law says that the interest is deductible when the geared asset produces assessable income or has a
reasonable chance of producing assessable income.
So deductibility would differ for each situation.
If the asset has a history of paying dividends but it is not at the moment, then it reasonable to assume it will in the future and would be deductible in the current tax year.
If you take it a step further, a company or business' sole reason for existence is to produce profit for its owners. Therefore dividends can be declared at any time even if earnings are retained regularly. To me if this asset is geared then I interpret this interest to be deductible and is the advice I give to my clients. However, this is only for deductions in the current tax year.
You can also claim the interest deduction using the CGT provisions, simply including the interest expense in the cost base when calculating the capital gain or loss. If you bought an asset with the idea of profiting from capital gain - then that is assessable income and interest is deductible.
Either way the interest is deductible, its just how you claim it that is the issue.
A vacant block of land is not a different story. If you are paid agistment fees or timber rental income, then this geared asset interest would be deductible in each tax year.
But a vacant block of land with no commercial activity taking place would not be deductible each tax year but is still deductible. If you bought the land with the idea of profiting from capital gain then the interest is still deductible but can only be claimed by adding the total interest cost to the capital cost base as above.
Hope that helps