Are all Offset Accounts OK ?

It's diverting income from the mum.

I don't think there are an tax issues to worry about but lots of legal issues for the mum. But this will advantage you.

 

As far as I can see, the taxation problem that arises in the situation of parents 'parking' money with kids (to save interest on the kids' mortgage or whatever) is for the parent if they receive any compensation/interest from the kids beyond just repayment of the principal. This should be declared as income.

Is it not be irrelevant what the kids have done with parked money? Whether it's been in an offset reducing interest or under a mattress, the only tax liability that arises is when the parents derive income from the kids in connection to the parked money. Or am I missing something?

In which case, an unscrupulous person might suggest that paying the parents in cash is an obvious solution...

 

This is the situation, her mum has received an inheretance, she gave her daughter a gift of 300k for the deposit on our house, her mum is still working and will be living in the attached granny flat of our house. The 100k that she said we can keep in our offset account until she needs it is what's left over from the inheretance, her mum can withdraw money from that account whenever she needs but won't be for some time as she is working and then also has super for when she retires in 5 or so years. We do not have to give anything in return for it such as interest repayments so she won't be benefiting financially in anyway from sitting her money in our offset

 

is she going to enter a loan agreement with you?
Is she on the govt pension?
How have you documented the transfer of funds?

 

No she isn't entering into any type of loan agreement with us. She is working for the next 5 years or so before she retires, then she has her super, not sure about the pension.
We haven't done the transfer yet, she was just going to deposit it into our account and leave it there until she needs it

 

If it is not a loan it must be a gift?
or are you acting as trustee for her?

 

Not acting as a trustee, she gave 300k to us as a gift but not the 100k, she was just parking the 100k into our account until she needed it

 

that presumably means the $100k is a loan.

 

Well Yeh I guess, maybe she should also say it's a gift as well, but then can we give it back to her?

 

it can't be both. but if she gives it to you then you can give it back.
If its a gift it is yours, if it is a loan it is hers. different legal consequences such as on death, bankruptcy etc.

 

OK cool, thanks for making me aware, we will do it as a gift.

 

Its always better for the recipient as a gift - its your asset then.