Interest rate when borrowing from a DTT

Just wondering how the interest rate is determined if you are personally borrowing from Discretionary Testamentry Trust, given there is quite a bit of variation among lenders rates in the market atm and I think it is meant to be around market rates from the perspective of the ato. I would be looking at distributing trust earnings to my minor children so ideally the higher the interest rate the better - purpose would be to upsize current ppor.
Thanks

 

could be nil to top market rates. The trustee determines the rate - with the borrower.

For tax reasons, s102AG anti-avoidance provisions would mean you would want to cap it at market rates, but there would be no minimum unless the will specifies.

 

Thanks Terry. Could it be at commercial rates or does it have to be in line with residential rates (since we would be using it to purchase ppor)?

 

by commercial i mean market rates not commercial lending rates!
Unsecured loans are more than 10%, residential mortgage secured loans maybe 4%

 

Just cause I'm a little slow tonight, does that mean the trust could charge an interest rate of up to 10% to lend me the funds if it were set up as an unsecured loan, or were you using that an example of an interest rate that would prompt the ato to look closer?

 

It could. But you would want to seek legal advice on the situation before implementing. perhaps a private ruling