Tax Tip 505: A Collection of ATO Publications on “Spousal Transfers”

Discussion in 'Accounting & Tax' started by Terry_w, 29th Jun, 2023.

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  1. Terry_w

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

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    I have been collecting private rulings, ATO IDs and any other ATO publication that covers the topic of deductibility of interest when one spouse transfers assets to the other spouse. This includes one buying out the other's share on a property that later becomes an investment property and being income producing.

    Note that no one can rely on a private ruling except the taxpayer that lodged the private ruling.

    Before doing a spousal transfer seek both legal and tax advice.

    ID 2001/79 says ok to deduct interest
    law.ato.gov.au/atolaw/view.htm?docid=AID/AID200179/00001



    Private Ruling Can I borrow to buy spouse out and claim the interest?
    Yes
    PBR 1012193391376 https://www.ato.gov.au/law/view/view.htm?docid=EV/1012193391376&PiT=99991231235958

    It was a gift but the loan still be deductible but “only the interest deductions that relate to the outstanding balance on the original loan can be included as interest deductions.”

    PBR 1012571308795 https://www.ato.gov.au/law/view/view.htm?docid=EV/1012571308795&PiT=99991231235958


    Private Ruling: Does Part IVA Apply to this Spousal Sale?
    No

    Authorisation Number 87701

    https://www.ato.gov.au/law/view/document?docid=EV/87701
     
  2. Terry_w

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

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  3. Terry_w

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

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  4. Paul@PAS

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

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    50 year interest only from a elderly relative. Interesting that the intended non-recourse nature of the principal isnt mentioned. I would have thought that is more non-commercial than comapring to a Div 7A loan and its terms
     
  5. Terry_w

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

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    Yeah it is a bit of a strange set up!