Trust Loan Documentation

Discussion in 'Share Investing Strategies, Theories & Education' started by BigStrawbs, 27th Nov, 2009.

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  1. BigStrawbs

    BigStrawbs Member

    Joined:
    1st Jul, 2015
    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.
     
    BigStrawbs, 27th Nov, 2009
    #1
  2. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
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    12,415
    Location:
    Sydney
    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
     
    Simon Hampel, 28th Nov, 2009
    #2
  3. BigStrawbs

    BigStrawbs Member

    Joined:
    1st Jul, 2015
    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.
     
    BigStrawbs, 28th Nov, 2009
    #3
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