Can I Borrow From Family For Shares + Claim Tax Deduction?

In Australia, I was wanting to borrow $100k from family at say 10% p.a. to buy shares (like you would a margin loan). This would generate $10,000 a year in interest payable to the person I borrowed the money from. Am I able to deduct the $10,000 interest from my taxable income as is the case with a bank offered margin loan or can I not deduct this $10,000 from my taxable income as it's not from a bank? Thanks!

 

Please note that I not am accountant .... and this is not advice etc etc

but my understanding is that if the rates are at a "commercial rate" of interest than this is acceptable. For example, I have used a standard home loan rate (say RBA indicator rate, or the CBA rate) + 2% (as it is a non secured loan).

However you should make sure there is a formal loan agreement signed by both parties.

Regards,

Jason

 

Thanks Jason. Any other opinions would be warmly welcomed

 

Hi Kipps.

My advice is to seek out an opinion from an accountant before preceding with anything like this

 

Of course but I didnt feel like spending $500.00 on an accountant opinion if its obvious it cant be done, hence asking for preliminary views here first.