All Topics / Legal & Accounting / Query re Interest on Loan

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  • Profile photo of KoozKooz
    Member
    @kooz
    Join Date: 2006
    Post Count: 39
    June 21, 2010 - 12:05 am

    Hi all.

    Can someone advise on the following?

    Mr & Mrs White hold an IP in their joint names. There is a loan against that property that has an available redraw of $10,000.

    I know that Mr & Mrs White can lend the $10,000 to their Family trust (and not claim the portion of interest  of $10,000 in their personal tax returns).

    Mr & Mrs White can lend the money either interest free or charge interest to the FT for the use of the money. When the FT gets around to paying the interest back, is this shown on Mr & Mrs Whites personal tax return as 'income'?

    Cheers

    Karen

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    June 21, 2010 - 12:27 am

    Yes, if the trust pays interest to the Whites, then it is income to them, and an expense to the trust.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of KoozKooz
    Member
    @kooz
    Join Date: 2006
    Post Count: 39
    June 21, 2010 - 2:58 am

    Thanks Terry.

    I though so!

    Cheers
    Karen

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