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Trust Loan Documentation

Discussion in 'General Investing Discussion' started by BigStrawbs, 27th Nov, 2009.

  1. BigStrawbs

    BigStrawbs Member

    Joined:
    16th Oct, 2009
    Posts:
    15
    Location:
    Adealide, SA
    Hi All,

    Does anyone have a proforma “loan” agreement I can use for the money I “loaned” my Trust?

    Also, to ensure the above is an arms length agreement that will keep the ATO and the like happy, is there a formula I should be using for the interest rate (i.e. RBA cash rate + 200 points or similar)?

    Thanks.
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    Was the money you loaned to the trust from your cash holdings, or from money you personally borrowed?

    You should generally not charge your trust interest - you should only ask it to cover your expenses. I can't remember the exact details (would have to ask my accountant), but I think there are some taxation reasons why you don't.

    If the money was your own cash, it is an interest free loan

    If the money was borrowed by you personally, you submit an expense claim to your trust for the interest costs (and any other costs) involved in lending it the money
     
  3. BigStrawbs

    BigStrawbs Member

    Joined:
    16th Oct, 2009
    Posts:
    15
    Location:
    Adealide, SA
    Thanks

    It was a loan from my personal bank account (ie cash holdings, not a personal or similar loan) for start-up costs that the "business" can now afford to pay back.

    Thanks for the reply, as normal, that was very helpful.