Terry's Tax Tips

Tax Tip 379: Tax Issues When the Lender Puts Borrowed Money into the Wrong Account Tax Tip 379: Tax Issues When the Lender Puts Borrowed Money into the Wrong Account

Tax Tip 380: Declarations of Trust and Stamp Duty Tax Tip 380: Declarations of Trust and Stamp Duty

 

Tax Tip 381: CGT Difference Between Joint Tenants v Tenants in Common Tax Tip 381: CGT Difference Between Joint Tenants v Tenants in Common

 

Hi Terry

Can you please write about the loans to trust and tax deductibility.I have gone through the tax tips but couldn't figure out how the tax deductibility work for the loans taken by the trust.

Example :
I am intending to apply for say $100k NAB equity builder loan through our discretionary family trust (myself and wife are trustees) and use the loan to buy approved index funds of NAB equity builder.
When it comes to dividends , I will distribute to my wife who is a low income earner but when it comes to the tax deduction on the interest paid for the loan of 100k, who can claim it and how does it work ?

Thanks

 

The trust is the relevant tax entity so it would claim interest as per normal - must pass all the s8-1 requirements.

 

Thanks Terry. Can I ask you how the negative gearing works under the trust ?
Eg: dividends received $800 but interest incurred is say $1000.

 

In that case there will be a negative income in the trust. This is a loss which cannot be distributed or used by anyone else but the trust

 

Thank you. I now understand.Would it then make sense then to borrow under my name and get the tax benefits.In what scenarios would it make sense to get loan under the trust. ? Sorry for too many questions.

 

You would only get the tax benefits if you were the owner of the shares in your personal capacity. What is negative usually or should become positive over time

 

Here is a complete list of my tax, legal and loan tips with an incomplete list of tips on debt recycling and strategies.

 

Tax Tip 383: How to Live Well Without Paying Income Tax Tax Tip 383: How to Live Well Without Paying Income Tax

Tax Tip 384: A Couple Living Tax Free on over $91,000 per year Tax Tip 384: A Couple Living Tax Free on over $91,000 per year

Tax Tip 385: Misunderstandings with the 6 Year Rule Tax Tip 385: Misunderstandings with the 6 Year Rule

Tax Tip 386: The effect of Non-Cash Deductions on Company Franking Credits Tax Tip 386: The effect of Non-Cash Deductions on Company Franking Credits

Tax Tip 387: Sale of Australian shares: Capital Gains for Foreign Residents Tax Tip 387: Sale of Australian shares: Capital Gains for Foreign Residents

Tax Tip 388: What is the Definition of “Spouse” for Tax Purposes? Tax Tip 388: What is the Definition of “Spouse” for Tax Purposes?

 

Tax Tip 389: Interest Deductibility and Names on Title Tax Tip 389: Interest Deductibility and Names on Title

Tax Tip 390: Land Tax in QLD for Joint Owners Tax Tip 390: Land Tax in QLD for Joint Owners

 

Tax Tip 391: Reducing Tax Tax Tip 391: Reducing Tax

Tax Tip 392: Why you Should Record all Expenses for Every Property Tax Tip 392: Why you Should Record all Expenses for Every Property

Tax Tip 393: Land Tax PPOR exemption for Property Owned by Children in NSW Tax Tip 393: Land Tax PPOR exemption for Property Owned by Children in NSW

Tax Tip 394: 25 Year Secured Loans from related Companies Tax Tip 394: 25 Year Secured Loans from related Companies

Tax Tip 395: LVR When Borrowing from a Related Company under a Secured Loan Tax Tip 395: LVR When Borrowing from a Related Company under a Secured Loan

Tax Tip 396: Borrowing from a Related Company and Second Mortgages Tax Tip 396: Borrowing from a Related Company and Second Mortgages

 

Great tips by Terry, thanks mate.

 

wheres the one on vic land tax and how it's best to settle on a certain date? :S

 

Tax Tip 397: Living Tax Free on Bonus Shares Tax Tip 397: Living Tax Free on Bonus Shares

Tax Tip 398: Claiming Interest Against CGT When Borrowing to Buy Shares with No-Dividends Tax Tip 398: Claiming Interest Against CGT When Borrowing to Buy Shares with No-Dividends

Tax Tip 399: Claiming Expenses While Using the 6 Year Rule Tax Tip 399: Claiming Expenses While Using the 6 Year Rule

Tax Tip 400: Changing Trustees can Trigger Stamp duty in NSW Tax Tip 400: Changing Trustees can Trigger Stamp duty in NSW

Tax Tip 401: Don’t Gift to a Company as it could be taxed on the way out Tax Tip 401: Don’t Gift to a Company as it could be taxed on the way out

Tax Tip 402: Bucket Companies Saving tax with Future Personal Income Tax Cuts Tax Tip 402: Bucket Companies Saving tax with Future Personal Income Tax Cuts

Tax Tip 403: Borrowing 100% for an investment property using a Secured Div7A loan Tax Tip 403: Borrowing 100% for an investment property using a Secured Div7A loan

 

Tax Tip 404: HECS/HELP Debt and Death Tax Tip 404: HECS/HELP Debt and Death

Tax Tip 405: Injecting Funds or Assets into a Testamentary Discretionary Trust Tax Tip 405: Injecting Funds or Assets into a Testamentary Discretionary Trust

Tax Tip 406: Entitlement to an ABN if you own Rental Properties Tax Tip 406: Entitlement to an ABN if you own Rental Properties

Tax Tip 407: Making a Charity Presently Entitled to Trust income but Not Paying it Tax Tip 407: Making a Charity Presently Entitled to Trust income but Not Paying it

Tax Tip 408: Funding Construction of a Granny Flat by Borrowing from a Related Company Tax Tip 408: Funding Construction of a Granny Flat by Borrowing from a Related Company

Tax Tip 409: Renting out an Australian Property while a non-resident – Taxation of Rent Tax Tip 409: Renting out an Australian Property while a non-resident – Taxation of Rent

Tax Tip 410: How a Purchaser Could be Liable for the Sellers GST on New Property Purchase Tax Tip 410: How a Purchaser Could be Liable for the Sellers GST on New Property Purchase

 

Should I continue with the tax tips?

 

Yes please.

 

Yes Please

 

Oh yeah, don't even think about stopping.