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office-laws01(Initiate)Initiate
27 Mar 2023

Would you please confirm that the tax treatment is correct in this scenario:

 

  1. Taxpayer refinanced a loan for a rental property and received a cashback incentive
  2. Taxpayer also incur borrowing expenses in relation to the loan for the rental property

Tax treatment on 1 (based on previous ATO answers) - the cashback incentive would not be taxable because it relates to the loan, not the property based on this. https://community.ato.gov.au/s/question?threadId=a0J9s0000001Dx8EAE

 

Tax treatment on 2 - the borrowing expenses would be deductible (over 5 years or length of the loan) because it is incurred for the refinance of loan for an investment property.

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CaroATO(Community Support)Community Support
29 Mar 2023

Hi @office_laws01,


You're spot on!


We don't consider cashback incentives as ordinary income, there's no need to tell us about it.


Unfortunately, the link you've provided isn't complete. There are several posts about claiming borrowing expenses. The basic rule is, if you meet the eligibility criteria and your borrowing expense is over $100, you'll spread the deduction over a 5-year period.


Here's an answer to a similar post on this forum, check it out.

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Most helpful reply

CaroATO(Community Support)Community Support
29 Mar 2023

Hi @office_laws01,


You're spot on!


We don't consider cashback incentives as ordinary income, there's no need to tell us about it.


Unfortunately, the link you've provided isn't complete. There are several posts about claiming borrowing expenses. The basic rule is, if you meet the eligibility criteria and your borrowing expense is over $100, you'll spread the deduction over a 5-year period.


Here's an answer to a similar post on this forum, check it out.

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Cashback incentive & borrowing expense on refinance | ATO Community