2 second tax question
- Thread starter billie40
- Start date
No, you are reimbursing savings, ATO will not regard the payment as connected to earning assessable income.
Hmm...so I'll need a third comment to clarify - seems we have two differing opinions? The issue is that if I am to transfer directly from the loan it takes up to three days, where as if I pay with cash/credit card it goes through immediately while I then wait for the loan funds to reimburse
Due to the way cards work it would comprise a blended loan - I don't agree. Cards make a VERY POOR way to pay for deductible expenses. The character of the deductible % is impossible to calculate and be reliable. This leads to it being a deduction that is easily challenged (ie denied in full)
Paying the expense direct from the loan using a linked debit card or just Bpay EFT etc is smarter.
What if you do not have a linked debit card to the IP loan account ?
Would it be ok to EFT out of your PPOR offset account ?
Or as a last option then use your personal credit card ?
You cannot "reimburse"" loan proceeds. You can only use a loan for a deductible purpose. If you make a payment from savings account the loan that then later credits the savings isn't for a deductible purpose. Your expense occurred first. You cant just match off the same $ value - That's just convenient. However, If you draw the loan proceeds and pay it into the savings then make payment that its not the same as the reverse.
This is no different to people who have a deductible loan on a property. Park spare cash into the loan then redraw it. It reduces the deductible loan everytime. However if a offset is used it doesn't.
Funny thing isn't it - Two accountants same issue. Two opinions.
Using the offset wont give a interest deduction. This thread was about the use of loan proceeds to enhance interest deductions by paying a deductible expense against loan / reimbursement to loan. The answer is if you don't have a linked debit then EFT out of the deductible loan and then new drawing will increase the interest deductions...
No to your reimbursement question.
Is the inspection for a prospective purchase of an IP prior to putting in an offer ?
Thank rob. No its for one we have a contract on. I assume from the info it means the interest is not deductible now that it's been paid from a personal use account but it will form part of the cost base of we ever sell.
Lucky we've made that mistake on a relatively small purchase!
So just to be sure, if I transfer the funds into am offset account BEFORE making a payment it's ok, but if I reimburse it's not? But of course it's preferable to bpay/EFT directly from the loan.
Lucky we've made that mistake on a relatively small purchase!
So just to be sure, if I transfer the funds into am offset account BEFORE making a payment it's ok, but if I reimburse it's not? But of course it's preferable to bpay/EFT directly from the loan.
funny how clients think its just a 2 second question. looks like a lot more than 2 seconds worth of opinions.
Its the thirty minutes of arguments when I give my 2 second opinion that takes all the time...
Ever notice that when you advise a client that selling a development isn't a capital gain they insist it is. And that GST cant possibly apply to them
Guess that why ATO audit so many prop sales from title records.
No because you cannot reimburse youself
Only if the offset account balance was zero before and after you transferred the money.
If there was a balance there including private funds then you will have a pool of mixed purpose funds from which you paid your expense. Only part of the payment will relate to the funds borrowed from your investment loan.
No it is not ok. Either way you cannot claim the interest. The only way to be able to claim the interest is to borrow to pay the expense. This could be done with a credit card and then that loan later refinanced.
