Borrowing money from overseas relatives and FIRB

Discussion in 'Legal Issues' started by scientist, 30th Jun, 2021.

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  1. scientist

    scientist Well-Known Member

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    If I borrow some money from an overseas relative, do I need to declare this to the FIRB? It's purely a loan, the overseas person is not gaining an interest in any property or security.
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I can't see why you would.

    If you are paying interest there are some tax issues to consider.
     
  3. scientist

    scientist Well-Known Member

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    Fantastic thanks

    I guess they are acquiring an unsecured debt interest over me, an Australian citizen, and the FIRB needs to have a sticky beak at it... good to know they don't.
     
  4. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    It would just be considered gifted funds and the lender may request a stat dec as evidence.
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    scientist states he is borrowing it so it can't be a gift
     
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  6. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    My bad, did not see that bit, cheers.
     
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  7. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    No. The FIRB is not concerned with loans. A loan is not an "investment". If the loan is enforceably convertible to equity interest over property or business etc it could still be a issue.

    However tax witholding is a key element and some loans may also be a problem for 100% interest deductibility. Seek tax advice on how to make it all complying and the terms and accounting for the indebtedness etc should be given tax advice. A lack of supporting (legal) records concerning a loan and any interest basis could expose some problems. Then the loan may be considered a private transfer of funds. Of course then the source of these funds could become a laundering issue so the legal docs are important as they support the source and nature of the inflow of foreign funds.
     
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  8. scientist

    scientist Well-Known Member

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    lol sounds like a bag of d**ks. I guess I'll leave everything untouched for now and if something happens I'll make a document. Funds arrived in my CBA this morning. Thanks for the info everyone
     

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