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Taxation on Benefit of Interest Free Loan

Taxation on Benefit of Interest Free Loan

Old Oct 8th 2002, 6:17 am
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Default Taxation on Benefit of Interest Free Loan

If you are in the fortunate position of having an interest free loan from a Trust Company in the UK, there is no tax on the benefit (i.e. the interest you would have had to have paid on a similar loan from, say a bank).

Is this the case in Australia too? or will you be taxed on the benefit (the interest you would have paid).

Hope someone can help with this one.
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Old Oct 8th 2002, 8:30 am
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Default Re: Taxation on Benefit of Interest Free Loan

Interested to hear of your UK tax free benefit in kind - is this interest free loan available as a result of your being employed? If so, I can't see how it is tax free ...

Anyway, your question relates to tax in Australia. In Oz employees aren't taxed on the provision of employer benefits in the way that employees are in the UK. Rather employers pick up the tab for many benefits provides through the imposition of Fringe Benefits Tax.

Hope this helps.


Originally posted by renth:
If you are in the fortunate position of having an interest free loan from a Trust Company in the UK, there is no tax on the benefit (i.e. the interest you would have had to have paid on a similar loan from, say a bank).

Is this the case in Australia too? or will you be taxed on the benefit (the interest you would have paid).

Hope someone can help with this one.
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Old Oct 8th 2002, 12:48 pm
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Default Re: Taxation on Benefit of Interest Free Loan

Originally posted by Alan Collett:
Interested to hear of your UK tax free benefit in kind - is this interest free loan available as a result of your being employed? If so, I can't see how it is tax free ...

Anyway, your question relates to tax in Australia. In Oz employees aren't taxed on the provision of employer benefits in the way that employees are in the UK. Rather employers pick up the tab for many benefits provides through the imposition of Fringe Benefits Tax.

Hope this helps.


Alan, thanks for you reply.

It's nothing to do with work but a trust set up by a wealthy relative. The trust loans us money as a mortgage for our house at a interest rate of zero percent. The "benfit" i.e. the interest we would otherwise have paid on a commercial loan isn't taxable in the UK.

I was wondering if the Trust lent us an interest free mortgage in Australia, would we have to pay tax on the benefit.

I appreciate your help, it's a good problem to have....

Dan
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Old Oct 8th 2002, 12:58 pm
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Default Re: Taxation on Benefit of Interest Free Loan

Hi Dan.

My first thoughts in the light of your comment: I can't see an income tax problem on the basis of any deemed income/benefit.

I'd need to review the matter in more depth though before being categoric.

Best regards.




Originally posted by renth:


Alan, thanks for you reply.

It's nothing to do with work but a trust set up by a wealthy relative. The trust loans us money as a mortgage for our house at a interest rate of zero percent. The "benfit" i.e. the interest we would otherwise have paid on a commercial loan isn't taxable in the UK.

I was wondering if the Trust lent us an interest free mortgage in Australia, would we have to pay tax on the benefit.

I appreciate your help, it's a good problem to have....

Dan
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