185. Arrangements for payment of interest less tax or of fixed net amounts.

If:

  1.  

    (1)     provision is made for the payment of interest1; and

  2.  

    (2)     the interest is payable without deduction of a sum representing income tax,

then whenever the provision was made, and whether it was made orally or in writing, if that provision is for the payment of interest 'less tax' (or uses words to similar effect), it must be read as if the words 'less tax' or the similar words were not included2.

If the provision is (however worded):

  1.  

    (a)     for the payment of:

    1.  

      (i)     interest on which the recipient is chargeable to income tax as interest under the