I just want to check if this would be legal before going ahead with it:
My mother has a term deposit account here, but lives overseas. I am authorised to look after her account. SHe hasn’t touched the account for about 10 years and it has compounded to around $50,000 now. She is getting 4.75% interest.I have a LOC, and I was wondering if, with my mother’s permission, I would place her money in our LOC to reduce our interest payments. I will offer her 5.5% interest. THe interest I am paying for the LOC is 6.6% at the moment.
So this way we both benefit and I think it would be a win/win.
Not planning to touch her money at all, just let it sit there to reduce our interest.If she puts the money into our LOC, will we have to pay tax over it, i.e. is this regarded as income?
Just don’t know if this is a [}
] or a [^] idea. What do you think?Yes it would be legal. But you would have to pay tax on it. but she is probably paying tax anyway. It would look good for your next loan application too>
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terryw for your reply.
Yes she is paying tax but only 10% because she doesn’t live in Australia.
I just have to work out if this would still benefit both parties if we have to pay income tax on it.Terry, why would Celivia have to pay tax?
Is that because paying out 5.5%, but saving interest on 6.5%? Even then I wouldn’t think it was taxable for them. It’s not income, it’s just helping to save them some money.
Her mother, yes, and as she’s paying tax already that won’t change.
Cheers
Mel
] or a [^] idea. What do you think?
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