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WilliamHu(Champion)Champion
11 June 2021

Hi,

I am a tax agent. One of my client is a mortgage broker. He receives commission from the bank for helping his customers get the loan. After he receives commission, he may pay the part of commission to the customer who applies the loan as kind of rebate or cashback. There will be an agreement between the mortgage broker and the customers who receive the cashback. Most of times the customers do not have ABN. Can anyone please advise if the rebate or cashback is an eligible deduction to the mortgage broker?

Also, if the loan is the loan for investment property, is the cashback a cost element for for the property of the customer who receives the cashback, or the income that needs to be declared at the ITR of the financial year?

Thanks

3,156 views
3 replies
3,156 views
3 replies

Most helpful response

Most helpful reply

RichATO(Community Support)Community Support
12 June 2021

*Edited by moderator to include further information*

Hi @WilliamHu

Self-employed mortgage brokers can claim a tax deduction for most expenses incurred in carrying on their business. The expense must relate to earning assessable income, TD 2016/14 has information on this type of deductible expense.

The example of rebated commission income from lenders which is covered by an agreement in writing with the customer would meet this requirement.

They won't be able to claim a GST credit on the rebated amount though if the customer does not have an ABN and is registered for GST.

The rebate amount is not considered assessable income for the client and does not need to be included on their return.

RichATO

All replies

Most helpful reply

RichATO(Community Support)Community Support
12 June 2021

*Edited by moderator to include further information*

Hi @WilliamHu

Self-employed mortgage brokers can claim a tax deduction for most expenses incurred in carrying on their business. The expense must relate to earning assessable income, TD 2016/14 has information on this type of deductible expense.

The example of rebated commission income from lenders which is covered by an agreement in writing with the customer would meet this requirement.

They won't be able to claim a GST credit on the rebated amount though if the customer does not have an ABN and is registered for GST.

The rebate amount is not considered assessable income for the client and does not need to be included on their return.

RichATO

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