Are there any restrictions on interest deductions for loans obtained from related parties?

Yes, the law prohibits interest deductions on loans that are obtained, directly or indirectly, from a related party. Where a loan is obtained from a Related Party and is used to finance income that is exempt from CT , the interest on the Related Party loan will not be deductible unless the taxpayer can demonstrate that the main purpose of obtaining the loan and carrying out the transaction is not to gain a CT advantage.