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  • Subject Name : Law

Contents

Part A..

Part B.

Bibliography.

Taxation - Part A

You take something with the help of the loan; you have to pay some interest on it. The amount of interest depends on the money you have taken as loan. It shall same for the property you have buy from loan but the property must have to be rented so the interest had been paid from the income of this property and then the lender deducts its money at a fix rate which has been decided before taking the loan. But the lender did not get the interest if he shall going to use it for its own purpose.

If the loan goes to increases consistently for the private purposes, so in that case we have to increase the rate of the interest accordingly. A property shall available for the rent or the property shall already rented so in that we have to claim more interest for different purposes such as for purchasing the depreciating assets, for the renovation of the property which shall currently rented, and for the repair of that property in case of any damage (Sadiq, 2019).

 we purchase a land or property with the help of the loan and on it you build a place you shall going to rental or we take loan for the renovation of that property which shall currently rental, so in that type of case we do not have to pay loan and interest on it, until we get our rent. But if we shall going to use that property for your personal use, so in that we have to pay the loan with interest.

 We take a loan from the banks or from the lenders; we have showed them an equal amount thing of the loan we shall take such as a rental property. If we fail to pay our loan so in that case they sell that property or thing to recover their money. Also the thing we shall giving to them as a guaranty will have to be the equal amount of that loan we take. The rate of interest shall different on other things such as we bought a car with the help of the loan. But the car shall go to be use for both purposes i.e. for rental and for the private use. In this case we have to calculate the interest rate very carefully. Also there shall a lot of deposits and withdrawals from the account this also becomes difficult to calculate the interest rate. So in that case we have separated the rental interest from the private interest, which we shall pay on loan. A person take a loan for the house that person rent out their previous home so that person make the money. We shall use the property to make money; the interest rate of the loan that we take for their home can be deductible. But the deduction on the loan cannot be claim because we take a loan to buy new home but that home shall not producing any money, which shall why the interest cannot deduct. In addition, the bank or the lender can use that home a guaranty for giving the person a loan (Braithwaite & Reinhart, 2019).

There shall also complicate loan that a person take from the bank or from the lender. In that type of loan, there shall two or more loans will be taken for the business or for their private purposes. The interest shall divide among them equally. Prepayments shall also collect at the less amount of interest. They have to pay their loan as faster as they can so they do not have pay more interest on loan.(Swinbrune, 2019)

This type of loan shall more beneficial because in this type of loan the interest rate in very high and the person who takes the loan has to pay loan on time, but if they will not do that the interest become to increase eventually. So before we shall going to take a loan we have to take advice from our tax adviser.

In light of the above discussion, Sarah has to $60,000 along with the interest. The only chance to get rid of interest shall by asking the bank to omit interest otherwise Sarah has to pay interest.

Taxation - Part B

To: Sarah

Dear Miss,

With due respect, I want to state that you have to pay interest to the bank. But you can deduct your interest expense as tax credit from your taxable income. you take something with the help of the loan, you have to pay some interest on it. The amount of interest depends on the money you have taken as loan. It shall same for the property you have buy from loan but the property must have to be rented so the interest had been paid from the income of this property and then the lender deducts its money at a fix rate which has been decided before taking the loan. But the lender did not get the interest if he shall going to use it for its own purpose. There shall also complicate loan that a person take from the bank or from the lender. In that type of loan, there shall two or more loans will be taken for the business or for their private purposes. The interest shall divide among them equally. Prepayments shall also collect at the less amount of interest. They have to pay their loan as faster as they can so they do not have pay more interest on loan. There shall very little chance that the bank will omit the interest on loan. Therefore, there shall no way to get rid of interest. Tax credits shall the reliefs given by the tax authorities to the tax payer. To qualify the tax credit, it shall necessary to pay the expense. As you have taken the loan from bank which qualifies you for the tax credits. Therefore, you have to pay $60,000 to the bank along with the interest to the bank to get qualified for the tax credits.

Thanks

Bibliography for Tax Law, Policy and Energy Justice

Swinbrune. (2019). Loan and interest , https://www.swinbrune.edu.au.

Wilson, A., Powell, D., Deutsch, B., Lam, M., & Welch, N. Taxation in Australia®.

Gerace, M. TAXATION IN AUSTRALIA| SEPTEMBER 2017 116.

Braithwaite, V., & Reinhart, M. (2019). The Taxpayers' Charter: Does the Australian Tax Office comply and who benefits? Centre for Tax System Integrity (CTSI), Research School of Social Sciences, the Australian National University.

Kraal, D., Haritos, V., & Cantle-Smith, R. (2020, March). Tax law, policy and energy justice: Re-thinking biofuels investment and research in Australia. In Australian Tax Forum (Vol. 35, No. 1, p. 31). Tax Institute.

Sadiq, K. (2019). Australian taxation law cases 2019. Thomson Reuters.

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