Offset Account query

[matto_]

Hi,

Basic question - but here goes.

I have had a deposit made into my actual loan account as opposed to the Offset account.

From an taxation perspective - am I able to move it from the main account into the offset account (or is it lost forever)? (I can obviously physically do it via internet banking).

Thanks,

Matto.

 

[Rolf Latham]

If the property is an ip' or will become an IP, the redrawn amount will not be deductible unless used for an investment purpose

Ta
rolf

 

[BMan]

can you reverse the transaction and get it done to the correct account?

 

[matto_]

If the property is an ip' or will become an IP, the redrawn amount will not be deductible unless used for an investment purpose

Ta
rolf

the redraw account is against an IP as is the offset account (actually against the same property).

BMan - would that not be the same thing as moving it directly myself?

 

[Terry_w]

the redraw account is against an IP as is the offset account (actually against the same property).

BMan - would that not be the same thing as moving it directly myself?

Not the same.

The bank could reverse the transaction so it didn't happen.

If you take money from a loan it is borrowing or creating a new loan with every withdrawal.

I've accidently paid money into a loan by mistake and rang up and had the transaction reversed. So it no longer appears in the statements. This may be harder if the money came from a third party though

 

[Rolf Latham]

Not the same.

The bank could reverse the transaction so it didn't happen.

some things are possible with most lenders.

I have found almost everything like that is very hard, but not impossible.

It just depends who wants to help, and who plays the ostrich game.

Had to reverse 2 very complicated settlements on refinances a week after the fact a few months back, now that took a bit of going up the food chain till someone didnt say "not possible"

ta
rolf

 

[matto_]

Just to clarify:

If I were to move the money direct from the redraw part of the account into the offset part of the account this would "create a new loan with every withdrawal"?

Would that mean that even though both are for investment purposes (and not being mixed with personal expenses) that somehow it would be termed - non-deductible?

 

[Terry_w]

Just to clarify:

If I were to move the money direct from the redraw part of the account into the offset part of the account this would "create a new loan with every withdrawal"?

Yes, every withdrawal is treated as a new loan. So deductibility on the interest on that withdrawal will depend on what the funds where used for.

[/QUOTE]
Would that mean that even though both are for investment purposes (and not being mixed with personal expenses) that somehow it would be termed - non-deductible?[/QUOTE]

If the withdrawn funds were used for investment purposes then it may not be an issue.

But if the withdrawn funds were parked in a savings or offset account, even termporarily, then the interest would not be deductible. This could then create a vast mathematical problem for the claiming of interest.

e.g say your loan was $100,0000 and you accidently paid it down by $1000. You decide to transfer this $1000 back to your savings account.

Now only 99% of the interest each month is deductible.

Imagine if you did it again or if your loan was PI. That would mean every payment into the loan would have to come off the deductible and non deductible portions in accordance with the percentage of deductibility of the loan.

So you pay another $1000 into the loan by mistake. 99% of this would come off the $99,000 investment portion and 1% off the non investment portion. so $99,000 - $999 = $98,001 etc etc

Its too much a pain in the butt already to worth out..

 

[ozmale42]

Even if it were to appear as an in and out on the bank statement I think it is an explainable mistake and any reasonable person would see it like that, even the powers that be at the ATO. If I were you just tell the bank to correct the position, or otherwise transfer the funds yourself , and carry on as if it never happened. Just keep a diary note of your actions and intentions

 

[matto_]

Even if it were to appear as an in and out on the bank statement I think it is an explainable mistake and any reasonable person would see it like that, even the powers that be at the ATO. If I were you just tell the bank to correct the position, or otherwise transfer the funds yourself , and carry on as if it never happened. Just keep a diary note of your actions and intentions

I am with you precisely - but wanted to confirm if this was valid or just me deluding myself.

 

[Terry_w]

I am with you precisely - but wanted to confirm if this was valid or just me deluding myself.

This is not valid.

 

[Dean2012ad]

and carry on as if it never happened

I am with you precisely - but wanted to confirm if this was valid or just me deluding myself.

Ignorance is not bliss when it comes to the ATO auditing you.

Listen to Terry, your issue is a similar issue many people have had on this forum, Terry has nicely explained to many the right way to go about it.

3 options:

1. Ask the bank to reverse the transaction (if not possible proceed to step 2)

2. Redraw the funds directly using a bank check and pay for investment expenses e.g rates etc. over coming years
(difficult if there is a minimum redraw amount)

3.Transfer the money from redraw into the offset, ignore it, get audited later down the track and find that because its too complicated for the tax man to figure out they deny deductibility of all your interest for that loan.

 

[matto_]

Thanks all for the advice. Much appreciated.

My intent wasn't ignorance, although bliss sounds nice (hard to get when talking tax).

I understood the"purpose/apportion"concept but wasn't clear on this particular circumstance. The old man deposited some money in my account but didn't use the right bsb number when he was in the branch.

Oh well, I guess I will leave it in my investment property buffer account.

Thanks again, especially Terry for your patience.

 

[rowena]

Couldnt you just stop your next payment coming out or lower it for your next loan payment..

aka if your dad put in 1000$ by mistake, and your loan repayment is $1200 instead of paying $1200 at next payment adjust it for the one month to just $200 as the $1000 is already in there as a advanced payment!?

if he put $2400 in there by mistake then stop 2 loan payments so your back to $1 or 2 in advance (you would be in advance because you had paid money on the loan early and therefore reduced principle, and then reduced interest).

This i would of thought would of been the easiest way.

 

[Terry_w]

Couldnt you just stop your next payment coming out or lower it for your next loan payment..

aka if your dad put in 1000$ by mistake, and your loan repayment is $1200 instead of paying $1200 at next payment adjust it for the one month to just $200 as the $1000 is already in there as a advanced payment!?

if he put $2400 in there by mistake then stop 2 loan payments so your back to $1 or 2 in advance (you would be in advance because you had paid money on the loan early and therefore reduced principle, and then reduced interest).

This i would of thought would of been the easiest way.

Most lenders would class this as a missed payment.

 

[rowena]

i didnt think they would if your ahead of payments. And ive been doing that for the past 6 months, no letters no warnings no phone calls, and i am ahead by a few thousand dollars. I even financed a 2nd homeloan through the bank about 3 months after i stopped putting money into that account and no issues or questions in regards to no payments being put into that account.

 

[Terry_w]

i didnt think they would if your ahead of payments. And ive been doing that for the past 6 months, no letters no warnings no phone calls, and i am ahead by a few thousand dollars. I even financed a 2nd homeloan through the bank about 3 months after i stopped putting money into that account and no issues or questions in regards to no payments being put into that account.

That would be best if it is acceptable to the bank. I remember trying this with ANZ when i made an extra payment by mistake. I just missed one payment but ended up getting a pink default letter from them when I skipped one trying to get back on track.