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Loan splits - tax issues? Bank's don't listen

Discussion in 'Accounting & Tax' started by mikey7, 16th Sep, 2016.

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  1. mikey7

    mikey7 Well-Known Member

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    Hi all,

    So I just asked my bank to split a 100k loan into 65k and 35k.

    How it looked before:
    100k loan
    - 60k used
    - 40k available

    They have now split the loans, and against my request, have taken 35k from the 60k used and maxxed out the new 35k loan. So it now looks like this:

    65k loan (original loan)
    - 25k used
    - 35k available

    35k loan (new loan)
    - 35k used
    - 0k available

    I need the 35k loan for another IP which settles next week (hence the split). I'm hoping that it can be as simple as taking 35k from 'original loan' and putting it into 'new loan' to make it exactly as I need it (and asked the bank for it to be). Will the ATO understand this, or has the bank completely f'ed me over?
    All accounts are IO. But I don't want them all mixed.

    Thanks,
    Mike
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The banks do this all the time.
    Your situation may be straight forward though. Refinance the $25k loan by borrowing from the $35k loan and paying down the $25k loan.

    Seek tax advice first though.
     
  3. mikey7

    mikey7 Well-Known Member

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    Thanks @Terry_w ,

    The issue is the 60k of used funds is attached to another IP. So they have spread one IP's loans into 2 accounts.

    I'm hoping it can be as simple as just transferring 35k from the 65k account (original loan) into the 35k account (new loan split) to make that $0 balance with 35k available, and then have the 35k available for the new IP settling on Monday. This will thus essentially reverse the transfer of funds the bank has done (but with a trace of course).

    So I ideally need it to look like:

    65k loan
    - 60k used
    - 5k available

    35k loan
    - 0 used
    - 35k available
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Withdrawing money from a loan is new borrowings so paying one with the other is a refinance.

    seek tax advice.
     
  5. mikey7

    mikey7 Well-Known Member

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    Gotcha! Thanks Terry
     
  6. dabbler

    dabbler Well-Known Member

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    Get them to do what is needed if they buggered up the instructions.
     
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  7. mikey7

    mikey7 Well-Known Member

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    @dabbler I did believe me. I kept getting passed on to someone else, who eventually told me that I needed to call the person at the branch that was setting it up for me.
    She's told me that it's not possible to change anything now and "I'd recommend a call to your accountant". Real helpful lol.
     
  8. Scott No Mates

    Scott No Mates Well-Known Member

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    Banks don't pay your tax, why would they care to listen?
     
  9. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Their paperwork where you tell them what you want, isn't detailed enough to adequately tell them what you want.

    Sometimes the best solution is to get them to issue a cheque for the cash out, then you deposit it manually to where it needs to go. That won't work for all circumstances though.
     
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  10. euro73

    euro73 Well-Known Member Business Member

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    This is why you shouldnt deal with branch staff. use a broker .
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Happens with brokers too. I had a client who did a split loan and instructed the bank to pay into account A. Of course they put it into account B with his other money.
     
  12. Perthguy

    Perthguy Well-Known Member

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    I agree with @Terry_w that this happens with brokers too. I had loan money deposited to an offset account and then the bank decided to put non-borrowed funds into the offset account. This was all through a broker.
     
  13. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Some banks do this offshore. We have spent weeks following simple requests up as a result. They usually hide behind no reply emails and cant be contacted by
     
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  14. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Thats SOP no matter how many times you instruct them.

    I know why you like LOCs :)
     
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  15. mikey7

    mikey7 Well-Known Member

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    This is the one thing I did myself and not thru broker. Everything done thru broker has been 100% perfect lol.
     
  16. dabbler

    dabbler Well-Known Member

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    I have had them do all sorts of things too & I only go through a broker, did you get anywhere ? You just have to speak to the right person.
     
  17. mikey7

    mikey7 Well-Known Member

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    Nah I've just transferred the money back to the correct account and clearly labelled it as a reversal of the banks stuff up.
     
  18. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I had NAB put the funds into the wrong account. No amount of arguing could get them to reverse it - they claimed it was impossible for auditing reasons.
     
  19. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    It's very common for banks to put money where ever the heck they like, no matter what you ask and no matter how clear you make the instructions. I just tell my clients to label the transactions and keep the paper trail. In the (reasonably unlikely) event you get audited, you've done the best you can.
     
  20. dabbler

    dabbler Well-Known Member

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    I wonder if there would be a change if a letter with your letterhead explaining they would be sued for losses should the ATO not allow the deductions due to error by them.

    I bet they would have no audit issues correcting if a staff member punched in a wrong account number belonging to someone else.