loan interest from pre tax dollars

Is it true that you were once able to take interest payments out of your wage before tax to pay investment property loans? I think I read somewhere that this scheme was canned by the ato last year.

If it is allowed would this scheme work if the investment property was in the name of a family trust and the wage earner was a trustee of the trust?
 
Is it true that you were once able to take interest payments out of your wage before tax to pay investment property loans? I think I read somewhere that this scheme was canned by the ato last year.

The short answer is "Yes" it's possible and "No" it's not been canned according to this. Although this answer was a couple of years ago, I believe the principles remain; FBT and exempt employer.

If it is allowed would this scheme work if the investment property was in the name of a family trust and the wage earner was a trustee of the trust?

Dunno if this will make a difference.
 
Loan Interest From Pre-tax Dollars

This is a simple form of salary sacrifice. Rule of thumb is that anything you can personally claim as a tax deduction you can salary sacrifice. If you use pre-tax dollars you cannot then claim the interest as a tax deduction at the end of the financial year. You cannot off-set this against income you receive from the property. Be aware you cannot salary sacrifice the principal.
 
Hi Gordon, yes that is true. However, super is a separate issue given the Government offers incentives for the individual to plan for their retirement.
With relation to other salary sacrifice items generally, they relate to computers, briefcases, calculators items for which the employee can claim the purchases as tax deductions as they relate to his/her work.
 
Hi Gordon, yes that is true. However, super is a separate issue given the Government offers incentives for the individual to plan for their retirement.
With relation to other salary sacrifice items generally, they relate to computers, briefcases, calculators items for which the employee can claim the purchases as tax deductions as they relate to his/her work.

Kev, OK, just thought your Rule of Thumb was too general and needs to be clarified/revised.

Further to super, those employees with employers who have concessional FBT treatment can benefit by sacrificing mortgage repayments, credit card private expenses, private entertainment expenses, holiday accommodation, etc. Doesn't have to be work-related or have government incentives to be able to be salary sacrificed and none of those can be claimed are tax-deductible.
 
This is a simple form of salary sacrifice. Rule of thumb is that anything you can personally claim as a tax deduction you can salary sacrifice. If you use pre-tax dollars you cannot then claim the interest as a tax deduction at the end of the financial year. You cannot off-set this against income you receive from the property. Be aware you cannot salary sacrifice the principal.

I don't think that's correct. Many people, especially who work for Public Benevolent Institutions, salary sacrifice everything form mortgage payments to school fees. The difference is that PBI's don't pay any Fringe Benefits Tax.

You can salary sacrifice almost anything, but the 'otherwse deductible' rule determines if any FBT is payable by the employer.
 
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