Another day

Hi Elkam

Your accountant was right in that the interest on the borrowings to put money into super would not have been tax deductible in the circumstances that you outlined.

If I read your 3rd paragraph correctly then yes your understanding is correct. My clients use the money in super to buy units, then they borrow the "outside" money to buy units in their own names to cover the total cost of purchase. The interest on this outside borrowings is deductible to them as they will recieve assessable income (or there is an expectation that they will) from the Unit Trust via a Distribution.

The 5% rule on In-House assets does not apply in these circumstances - the specific regulation that deals with this is the first link in my prior thread. The benefits of this structure are quite significant.

 

Now I understand the reason for the first link in your previous post. I hadn't realised that the 5% rule only applied to in house assets.

Thank you for sorting that all out for me.

Cheers