If my son has an apprentice support loan which is allowed to be used for anything, can he invest in shares and claim the indexation applied to the loan, which is basically just another term for interest, on his tax return since its used for income producing? Like we debt recycle the mortgage when investing?
Hi @MegMeg
Whilst purchases aren't monitored, the intention of the loan is to assist the apprentice with the cost of living, learning, and completing an apprenticeship by reducing financial burden and allowing the apprentice to focus on their work and learning.
Indexation is not the same as interest. Indexation maintains the real value of the principal amount loaned, in line with changes to the CPI or WPI. You can't claim deductions for repaying a principal amount, and therefore you can't claim a deduction for indexation you incur repaying a government loan.
If they were to use the loan to invest in shares, any associated earnings would contribute to their taxable income. Keeping in mind once their income passes the threshold, they will need to start making payments towards the loan.
You can check out the Australian Apprenticeship Support Loan Guide online for more info.
Hi @MegMeg
Whilst purchases aren't monitored, the intention of the loan is to assist the apprentice with the cost of living, learning, and completing an apprenticeship by reducing financial burden and allowing the apprentice to focus on their work and learning.
Indexation is not the same as interest. Indexation maintains the real value of the principal amount loaned, in line with changes to the CPI or WPI. You can't claim deductions for repaying a principal amount, and therefore you can't claim a deduction for indexation you incur repaying a government loan.
If they were to use the loan to invest in shares, any associated earnings would contribute to their taxable income. Keeping in mind once their income passes the threshold, they will need to start making payments towards the loan.
You can check out the Australian Apprenticeship Support Loan Guide online for more info.
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