Shares & Funds Re-Allocate ownership % of shares; treatment of loan

Discussion in 'Accounting & Tax' started by NG., 24th Aug, 2019.

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  1. NG.

    NG. Well-Known Member

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    Hi Guys

    Current position;

    2 x IHL taken out against PPOR with purpose to purchase income producing shares. These two loans are in joint names. Have purchased shares in the past in joint names.

    Moving forward I wish to transfer the ownership of the shares, still in joint names but look at 99% my favour, and 1% the wifes? Do I need to formalise this and what about the two loans that are in joint names?

    Just looking to make it clean from an audit/tax/accounting point of view.

    Cheers
    Alex
     
    Last edited: 24th Aug, 2019
    NG., 24th Aug, 2019
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  2. Terry_w

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

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    what do you want to change ownership of the shares or the property?
     
    Terry_w, 24th Aug, 2019
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  3. NG.

    NG. Well-Known Member

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    shares. also edited my post! ta
     
    NG., 24th Aug, 2019
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  4. Terry_w

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

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    Interest would not be deductible if joint ownership % is changed and the loans. The ATO considers that a joint owner cannot borrow to pay out a joint loan.
    You would need to sell and borrow to buy them back - considering part iva
     
    Terry_w, 24th Aug, 2019
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  5. Terry_w

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

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    Keep in mind the joint ownership of shares may not be a good idea. There is no opportunity to sell shares solely owned by one person. Any share will trigger a capital gain by both persons.
     
    Terry_w, 24th Aug, 2019
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  6. Paul@PAS

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

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    How can you own 99% of shares in one name and 1% in the other ?? The answer is a issue requiring legal advice. Property laws in each state permit tenants in common in a % other than 50/50 however shares are far more problematic. Part IVA may apply and financing issues may also impact this anyway.
     
    Paul@PAS, 26th Aug, 2019
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  7. NG.

    NG. Well-Known Member

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    Yes, I may have to sell. Copy the CGT. Start a fresh solely in my name moving forward!
     
    NG., 26th Aug, 2019
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  8. Paul@PAS

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

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    It can be done but its effectiveness is questionable.

    1. A fixed trust where one individual borrows for their units and the other does not ?
    2. Limited partnership
    3. A general partnership BUT the ATO may ignore it where spouses are the partners

    Buying your partners half interest would only trigger CGT for one person. Maybe a matter of a transfer from joint holding to a sole holding. Its likely no refinance is needed. Joint names on the loan doesnt mean borrowing is deductible 50% each. The legal owner of the shares may be one of you and its then 100% deductible. Maybe.
     
    Paul@PAS, 26th Aug, 2019
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