ATO Community

Borrowing money from friend

I'm new

Views 1054

Replies 1

Hi,

 

A friend of mine agreed to let me borrow $40,000 from him for use as deposit for a home loan. It will be done via bank transfer. 

 

I will be paying him back the same amount within a year. Will this amount be taxed in any way?

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Former Community Support

Replies 0

Hi @notesonhobbies

 

Generally speaking, small loans and monetary gifts from family members or friends aren't considered taxable income. However, if the loan or gift is a large amount or part of a business-like activity or income-earning activity, it may be taxable. You'll need to keep records stating the loan is a gift.

 

Any interest you earn on the loan in an Australian bank account may be subject to tax.

 

Hope this helps!

1 REPLY 1

Most helpful response

Former Community Support

Replies 0

Hi @notesonhobbies

 

Generally speaking, small loans and monetary gifts from family members or friends aren't considered taxable income. However, if the loan or gift is a large amount or part of a business-like activity or income-earning activity, it may be taxable. You'll need to keep records stating the loan is a gift.

 

Any interest you earn on the loan in an Australian bank account may be subject to tax.

 

Hope this helps!