Tax Deductibility Question

Discussion in 'Accounting & Tax' started by Peppas, 6th Jan, 2020.

Join Australia's most dynamic and respected property investment community
  1. Peppas

    Peppas Well-Known Member

    Joined:
    21st Dec, 2017
    Posts:
    184
    Location:
    Sydney
    Hi all,

    Probably a bit of a dumb question, but I have a question on interest deductibility in regards to using borrowed funds to purchase shares. I have a loan with some funds available - if I redraw this and use it to buy shares in my wife's name, am I able to still able to deduct the interest from my tax? The loan is solely in my name. Thanks!
     
  2. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    35,801
    Location:
    Australia wide
    You buy in your wife's name? Is she trustee?
    Or
    Are you going to lend to your wife? If so you cannot claim the interest. If a written loan agreement on commercial terms is entered into she could potentially claim the interest assuming she is not a trustee and the shares are once producing.

    Seek proper advice
     
    Peppas likes this.
  3. Peppas

    Peppas Well-Known Member

    Joined:
    21st Dec, 2017
    Posts:
    184
    Location:
    Sydney
    Ah thanks Terry. Clears most of it up!
     
    Terry_w likes this.
  4. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    35,801
    Location:
    Australia wide
    I have written about this thing a few times in my tax tips, check them out
     
  5. thydzik

    thydzik Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    539
    Location:
    Perth
    draft a loan to your wife, shouldn't be an issue.

    -------------------------------------------------
    My posts are general in nature and do not constitute professional advice.
     
    Terry_w likes this.
  6. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    7,887
    Location:
    Australia
    But the deduction will be in your wifes name offset against dividend income.
     
    Terry_w likes this.
  7. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    18,445
    Location:
    Sydney
    Assuming the shares acquired pay income. If they dont its not deductible interest but becomes a capital cost
     

PFA Property Expo is designed in a way that visitors can gather maximum real estate knowledge with added benefits. Different speakers will be presenting on different topics as where to buy, when to buy in this market...