Tax Tip 97: What is a gift from a taxation point of view?

Thanks Terry.
Say I borrow $100000.00 thru my PPOR loan and give my adult child a gift of 100000.00, I then repay my loan back regularly from my fund. In the meantime, my investment loan was not being involved in this event. the investment loan has offset account attached to it and the offset has plenty of fund to cover monthly repayment on investment loan. i then decide to pay my ppor loan quickly and use money such as wage etc to pay my ppor quickly without touching investment loan and offset account attached to the loan. The loan continue be repaid from investment attached to offset account.
ppor loan has its own offset account
investment loan has its own offset account
would it be ok?

 

ok in what sense?

I would have the offset account attached to the $100k loan as the interest on this won't be deductible.

 

Yep, my main concern that wanting to pay off the PPOR Loan quickly, will stop me from adding anymore fund to investment offset account, so while paying the ppor loan thru offset account, i have neglect my offset account linked to my loan account. is this fair on the eyes of the regulator?

 

There is no law which compells you to pay down deductible debt ahead of non deductible. It would make sense to minimise the non deductible debt.

 

Thanks for the post Terry.

I am wondering if a company can legally make a gift to another entity. How about a bucket company gifting its after-tax fund to a family trust controlled by the company director?

 

Companies can gift like persons, but there are a lot of tax and legal issues. In this case it would likely result in a deemed dividend which is unfranked so 47% tax.