There is no prescribed form for written agreement. However, the agreement should at least identify the parties, set out the essential terms of the loan (i.e. the amount and duration of the loan, the repayment obligation and the interest rate to be paid) and be signed and dated by the parties. We borrowed money from our parents to pay for investment property. The maximum amount we could get from the bank was not enough to buy the property. A credit agreement between us and our parents was arranged and certified by a justice of the peace. The agreement stipulates that the interest rate is 5% higher than the bank`s mortgage interest rate. Our parents have the last right to decide when they want the repayment of interest and principles. The property generated rental income. If, in the future, interest is paid to our parents at their request, will interest be tax deductible on rental income? I guess they also need to claim income that is accessible to savings income in their tax returns? Example 4 – Loans that were set in writing before the loan date If you do not pay your MYR in full before the end of the lender`s 2019-20 income year, you must make an increased MYR during the 2020-21 income year. Paying as much as possible for your 2019-20 MYR will minimize the amount of your 2019-20 MYR deficit and the increase in MYR during the 2020-21 income year. The taxpayer argued that there was indeed evidence that there were loan agreements, but by conclusion. That`s what happened, he says, as part of a 6-month-later assignment agreement, under which the lender company, of which he was the sole director, claimed to be selling this alleged credit debt of $US 640,000.
However, this document was erroneous on its face, as it stated that the debt (object of the assignment) had arisen around 30 June 2010 and not between August 2009 and January 2010, when the transfers of $640,000 actually took place. He also argued that repayments made on or after June 30, 2014, supported his assertion that the $640,000 transferred was a loan. The AAT found that the repayments `began only after [the taxable person] became aware that the [Commissioner] had carried out a thorough audit of those financial agreements and that he would probably call into question the existence of the loans in question`. . . .