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Investing funds and tax trails question.

Discussion in 'Accounting, Tax & Legal' started by Simon, 6th Sep, 2007.

  1. Simon

    Simon Well-Known Member

    Joined:
    17th Sep, 2005
    Posts:
    520
    Location:
    Newcastle
    Quick question team.

    I need to drag $25 000 out of my finances for a seed capital raising project. I need it within 5 days and just found out today.

    I have applied for an LOC to cover this but it wont be ready in time.

    I have more than enough money in my offset account but that is earmarked for personal use (PPOR). I can use this and reimburse it from the LOC.

    But I want to keep the trail clean tax wise ie the LOC is for this sort of thing not the offset account.

    If I use the offset money now and replace it from the LOC in a fortnights time, how do I make sure this trail is squeaky clean for the ATO?

    Thanks

    Simon
     
  2. Simon

    Simon Well-Known Member

    Joined:
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    Location:
    Newcastle
    I can take it from my margin loan then replace it from my LOC a week later. That might be the best bet.

    Takes my LVR into the 60 something % range though which I don't like but it isn't for long.

    No other ideas forthcoming?

    Ta
     
  3. Rob G.

    Rob G. Well-Known Member

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    Location:
    Melbourne, VIC
    Been watching this one ... no responses, hmmm ...

    Its sad the law is so uncertain, first the judges & Commissioner state a rigid tracing of funds is unnecessary and then they rule otherwise on repayments of loans.

    You are probably better to avoid reimbursing your private LOC if you can. Even if you did not claim interest deductions for 1 week it might not add weight to your argument.

    You could try an Oral Ruling from the ATO, they can be pretty quick but this does not necessarily absolve you (what is the point of them then ?).

    Sounds like the margin loan is safer to me for the time being.

    Cheers,

    Rob
     
  4. NickM

    NickM Co-founder Staff Member

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    Sydney
    I would go with the margin loan scenario
    NicKM
     
  5. Simon

    Simon Well-Known Member

    Joined:
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    Location:
    Newcastle
    Thanks Nick. Fortunately the NAB came through with the LOC in just a couple of days. Sometimes relationships with PBs do work well.