Hi All,
I have a question, which I asked two different accountants (and received two very different answers) as well as the ATO (who could not give me a clear answer). So any advice and the reasoning behind it would be much appreciated.
The situation is; currently have a family partnership which has a $40k business loan with CBA (paying off a small office). I want to transfer this loan to two credit cards (one in each name of the family partnership members, ie $20k each).
The question is, will the ATO still see this as a loan which the partnership can claim deductions against – or will they now see it as a personal loan ?
I am of the opinion that if there is a clear paper trail it should be ok, because the purpose of the finance and what the money is used for is clear – and this would be more important than who owns the loan or what it is secured against.
FYI – the reason for switching is that CBA is charging 11.5% and i can transfer the balance to the credit cards for 5% for the life of the balance transfer.
Thanks.
You will be basically refinancing one loan into two separate loans. Names on the loans doesn't really matter as it will be X borrowing and then onlending to X and Y to pay out the CBA.
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
Sounds interesting. Is there a limit to 'life'. Is this an unusual offer for a credit card (and who's the CC with)? It sure beats the standard variable rate. Perhaps I could refinance some of my home loan?
Andrew
itsandrew
Go as far as you can see and you will see further.
Thanks for your advice Terry…. much appreciated !
Andrew, the CC company is Citibank, and yes there is a catch. The minimum monthly payment is either $50 or 2% of the outstanding balance (whichever is higher) – so, the maximum balance transfer amount is $30k, which means initial monthly payment of $600 and as you need to be paying 2% of the total loan every month – this means the life of the loan is restricted to 50 months (not taking interest into consideration).
Regards,
Rust992001
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