Tax Alert March 2021

Tax Alert March 2021

Individuals and small business owners who have taken advantage of the government’s COVID-19 support programs will find themselves increasingly under the tax man’s microscope in coming months. This is just one of the key developments occurring in the world of tax at the moment.

Data matching program expanded

The Tax Commissioner has applied for additional data from Services Australia to allow the ATO to verify the eligibility of applicants for the government’s key COVID-19 support schemes.

The ATO will begin matching the data against eligibility criteria for the JobKeeper, temporary early access to superannuation, Temporary Cash Flow Boost and JobMaker Hiring Credit schemes.

Objectives of the program include “verification of applications and identify compliance issues”, identifying individuals and businesses “failing to meet their registration and/or lodgment obligations”, and ensuring all tax and super reporting obligations have been met.

Expenses shortcut extended again

Employees using the shortcut method to calculate their working from home expenses can continue using this method after the ATO extended the deadline for the scheme to 30 June 2021.

The ATO has updated its guidance to enable employees and business owners working from home between 1 March 2020 and 30 June 2021 to claim a flat 80 cents per work hour for running expenses during this period.

Clock runs down on STP exemption

The ATO has reminded small employers (with 19 or less staff) exemptions from the single touch payroll (STP) system end on 30 June 2021.

From 1 July 2021, employers who are currently exempt from reporting closely held payees will need to report them through STP. (Closely held payees include family members, directors or shareholders of the business and beneficiaries of a trust). They will, however, have the option to report the information on a quarterly basis.

Super choice expanded for employees

On 1 January 2021, the rules relating to choice of super fund changed and the ATO is warning employers they must comply.

Any new workplace determination or enterprise agreement made on or after 1 January 2021 must now offer employees the right to choose the super fund into which their employer pays their compulsory Super Guarantee (SG) contributions. This applies to both existing and new hires.

Once an employee has nominated a fund using the ATO’s Standard Choice Form, the employer must pay their SG contributions into that fund. Employers who fail to comply risk being audited and penalised by the ATO.

JobMaker Hiring Credit

Businesses considering hiring new employees aged 35 and under may be eligible for a government payment through the new JobMaker Hiring Credit scheme.

Employers will receive payments of up to $200 a week for each eligible employee aged 16 to 29, or $100 a week for an employee aged 30 to 35. Eligibility criteria include holding an ABN, being registered for PAYG withholding tax, reporting through STP, and being current with your income tax and GST lodgment obligations.

Businesses can register for JobMaker on the ATO website at any time until the program closes.

Business concessions start

Small to medium-sized businesses with an annual turnover of $10 to $50 million are eligible for several new tax concessions from 1 April 2021.

The concessions were announced and legislated late in 2020. Under the new rules, eligible businesses are exempt from 47% FBT when they provide employees with car parking or work-related portable devices (such as phones and laptops).

Eligible businesses are also able to access simplified trading stock rules and remit their PAYG instalments based on GDP adjusted notional tax. From 1 July, they will have up to two years to seek an amendment to a tax assessment.

Claiming GST credits

The ATO is reminding businesses about the rules relating to claiming GST credits for business purchases.

Although a credit is available for most business purchases, valid claims cannot be made if the supplier is not registered for GST, even if their tax invoice lists an ABN and GST amount. The ATO recommends businesses use the ABN Lookup tool to check their suppliers prior to making a claim.

If a purchase is used for both personal and business use, you need to work out the business use portion of the GST and only claim that portion.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Are you really a contractor or employee?

Are you really a contractor or employee?

"Having an ABN, agreeing to work on a contract basis and issuing invoices do not guarantee the ATO will see you as a contractor.

Employment and contract relationships have very different tax implications. This short guide will help clarify where you really stand."

For employers, you also need to recognise the potential for the ATO to impose significant penalties for failing to meet your obligations for tax and super payments if you incorrectly categorise an employee as a contractor.

Contractor or employee?

Deciding if you are a contractor or an employee can be complex, but a key distinction is that an employee works in the business while an independent contractor runs his or her own business.

Contractors are self-employed and engaged to undertake a specific task at an agreed price, usually over a set period. They can choose their own hours and must pay for their own insurance, sick leave, holidays and super contributions.

Although COVID-19 has seen many employees working from home and claiming tax deductions for their home office running expenses, they remain an employee.

On the other hand, if you’ve been made redundant and have begun offering services to a range of businesses from your home office, you are likely to be a contractor.

How to tell an employee from a contractor

The table below outlines six factors that, taken together, determine whether a worker is an employee or contractor for tax and super purposes.

 

Employee

Contractor

The worker can’t delegate the work or pay someone else to do it.The worker can delegate the work or pay someone else to do the work.
The worker is paid for the time worked, at a price per item or activity, or via commission.The worker is paid for a result based on a quote, calculated using hourly rates or price per item to work out the total cost of the work.
The business provides all or most of the equipment, tools and other assets required to complete the work; or the worker provides them but the business provides an allowance or reimburses the cost.The worker provides all or most of the equipment, tools and other assets required to complete the work and doesn’t receive an allowance or reimbursement for this.
The worker takes no commercial risks; the business is legally responsible for the work and liable for the cost of rectifying any defects.The worker takes commercial risks, is legally responsible for their work and liable for the cost of rectifying any defects.
The business has the right to direct the way in which the worker does the work.The worker has freedom in the way the work is done, subject to the specific terms in any contract or agreement.
The worker is not operating independently of the business and is considered part of the business.The worker operates their business independently, performs services as specified in the agreement and is free to accept or refuse additional work.

Source: ATO website

Recognising a contracting arrangement

Even if you hold an Australian Business Number (ABN) or a registered business name, you are not automatically a contractor. Being paid after submitting an invoice makes no difference either.

The length of a project or how regular the work is are also immaterial to your employment status. Both employees and contractors can be used for casual, temporary, on-call or infrequent work.

Both employers and contractors can check whether a proposed work arrangement is legally deemed to be employment or a contract using the ATO’s Employee or contractor decision tool.

Avoiding tax and super responsibilities

Under current legislation it’s illegal to make misleading statements to an employee to try to persuade them to take on a contract arrangement. You are also not permitted to dismiss or threaten to dismiss an employee so you can re-hire them as a contractor.

Arranging for an employee to sign a formal document stating they are a contractor will not override the true employment relationship – or your tax and super obligations for them.

If you would like help understanding and complying with your tax and super obligations as either a contractor or employer, contact us today.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Tax Breaks for Retraining Staff in 2021

Tax Breaks for Retraining Staff in 2021

For many business owners, fear of incurring a Fringe Benefits Tax (FBT) bill has kept them from retraining and re-skilling their employees to perform different roles or activities within the business.

But a new exemption announced by the government as part of last year’s Federal Budget is changing all that.

If COVID-19 has meant you need to transform your business and the responsibilities of some of your employees, now could be a great time to consider reskilling your existing staff.

Training and the FBT burden

Traditionally, if you provide training to your employees that is not sufficiently connected to their current role, you could find yourself facing a hefty FBT bill at the end of the year.

Say you have someone currently performing an administrative role, but you decide you want to redeploy them into a sales position; to give them every chance of success they will need to be trained in sales techniques.

As these skills are not required in their current role, the ATO would normally deem this type of training to be a fringe benefit you provided to your employees. This means you will have to pay FBT at the 47 per cent tax rate on the total cost of their training.

Not surprisingly, this has been a major disincentive for most employers to retraining or upskilling their workforce into new roles.

Budget announcement

All this changed in the October 2020 Budget, when the government announced it was exempting employer-provided retraining activities from FBT to encourage employers to re-skill their existing staff for new roles within the business. Or even outside the business if the pandemic meant they were to be made redundant.

With the impact of COVID-19 forcing many small businesses to continue reshaping their business to cope with a rapidly changing market, FBT-free training could be a valuable way to retain your staff within the organisation, or to help them transition to new opportunities outside.

The government believes the new incentive will encourage more Australian business owners to retrain and redeploy their existing workers into new roles within their company.

Limits on the exemption

As always, the devil is in the detail.

The new FBT exemption does not extend to retraining acquired by way of a salary packaging arrangement, or training provided through Commonwealth supported places at universities, as this already receives a benefit.

It also does not cover repayments towards Commonwealth student loans.

Where the new exemption does apply, it can be claimed for training costs incurred from 2 October 2020.

This is how it works.

Case study

Jane owns two small specialist record and DVD stores in Melbourne. Due to the pandemic and subsequent lock-down, she decided to close her physical stores and make her three sales assistants redundant.

Despite this, Jane is keen to help her employees find new employment and offers them $2,000 each in retraining assistance. During the pandemic Jane’s online sales grew substantially and she now needs three new staff for web design roles.

She has decided to take advantage of her existing employees’ specialist knowledge of her business and is providing them with training in web design so they can take up these new roles.

Previously, if it cost $2,000 each to retrain her three employees, she would have been liable for 47 per cent FBT on the $6,000 cost to her for the training. With the new exemption, she will be able to retrain her staff without incurring any FBT liability.

Personal training deductibility proposal

As part of its statement on the FBT exemption, the government also announced it was planning to consult on a potential reform for individuals who undertake training at their own expense.

The government is considering allowing individuals undertaking training that relates to their future employment to deduct the cost from their income.

This would represent a major change, as the current tax rules limit deductions for personal training to training related to your current employment – not future employment.

Consultation on this reform is yet to be carried out but, if implemented it will provide a great opportunity for employees at all levels to undertake tax-deductible training.

If you have any questions about fringe benefit tax liabilities when retraining your staff or more broadly in your business, please don’t hesitate to give us a call.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Tax Alert December 2020

 

Tax Alert December 2020

Although individuals and small business owners are now enjoying welcome tax relief in the wake of some valuable tax changes, there is more on the horizon as the government seeks to reboot the Australian economy.

Here’s a quick roundup of significant developments in the world of tax.

Temporary carry-back of tax losses

Previously profitable companies struggling with tough COVID-induced business conditions may find the government’s new tax loss carry-back provisions a useful tool to help keep their operation running. Businesses with a turnover of up to $5 billion can now generate a tax refund by offsetting tax losses against previous profits.

Under the new measures, eligible companies can elect to carry-back tax losses incurred in 2019-20, 2020-21 and 2021-22 against profits made in 2018-19 or later years to gain a refund.

Full expensing of capital purchases

Another valuable initiative is the introduction of a temporary tax incentive allowing the full cost of eligible capital assets to be written off in the year they are first used or installed ready for use.

The measure applies from 6 October 2020 to 30 June 2022 and applies to new depreciable assets and improvements to existing assets.

Small businesses with an annual turnover under $10 million can also use it for second-hand assets.

Depreciation pool changes

From 6 October 2020, small businesses with a turnover under $10 million are allowed to deduct the balance of their simplified depreciation pool. This applies while full expensing is in place.

The current provisions preventing small businesses from re-entering the simplified depreciation regime for five years also remain suspended.

Early start to personal tax cuts

Individual taxpayers are now enjoying the next stage of the government’s tax plan, after the start date was brought forward to 1 July 2020.

Under the Stage 2 changes, the low income tax offset increased from $445 to $700; the upper limit for the 19 per cent tax bracket moved from $37,000 to $45,000; and the upper limit for the 32.5 per cent bracket rose from $90,000 to $120,000.

During 2020-21, there is also a one-year extension to the low and middle income tax offset, which is worth up to $1,080 for individuals and $2,160 for dual income couples.

Shortcut for home expenses extended again

Employees using the shortcut method to calculate their working from home expenses can continue using it following the ATO’s decision to extend its end date again – this time until 31 December 2020.

The ATO has updated its guidance on the shortcut measure and stated consideration will be given to a further extension.

The shortcut method allows employees and businessowners working from home between 1 March 2020 and 31 December 2020 to claim 80 cents per work hour for their running expenses.

Additional small business tax concessions

Small businesses should also check out their eligibility for several tax concessions now the annual turnover threshold for them has been increased from $10 million to $50 million.

From 1 April 2021, eligible businesses will be exempt from the 47% FBT on car parking and work-related portable devices (such as phones and laptops) provided to employees.

Eligible business will also be able to access simplified trading stock rules, remit their PAYG instalments based on GDP adjusted notional tax and have a two-year amendment period for income tax assessments from 1 July 2021.

Granny flats to be CGT exempt

Families considering building a granny flat on their property will benefit from the announcement of a new capital gains tax (CGT) exemption for granny flat arrangements. Although the exemption is yet to be legislated, the planned start date is 1 July 2021.

The exemption will clarify that CGT does not apply to the creation, variation or termination of a formal written granny flat arrangement within families. CGT still applies to commercial rental arrangements.

Refresh your ABN details

The ATO is reminding business taxpayers to keep their Australian Business Number (ABN) details updated so government agencies can identify business in affected areas during natural disasters.

Incorrect details could see you miss out on valuable assistance or potential grants during and after a disaster.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


FBT changes under COVID- What are the rules

FBT changes under COVID: What are the rules?

FBT changes under COVID- What are the rules

FBT changes under COVID: What are the rules?

The COVID-19 pandemic is raising some interesting questions for small business employers in relation to their Fringe Benefit Tax (FBT) liabilities.

With many employees working from home, common employee benefits are often not being supplied, while some employers are now providing protective equipment such as gloves and COVID-19 testing.

To complicate things there are new FBT exemptions on the horizon next year, so it’s important to ensure you know the rules when preparing your FBT return.

Workplace items used at home

If you have provided your employees with a laptop, portable printer or electronic device so they can work from home due to COVID-19, these items are exempt from FBT if they are primarily used for the employee’s work.

Where you allow your employee to use a monitor or keyboard normally used in the workplace, provide them with stationery or computer consumables, or pay for their phone and internet access, the minor benefits exemption applies. This covers minor, infrequent and irregular employee benefits of less than $300.

COVID-19 protective items

On the other hand, you may need to pay FBT on items given to employees to help protect them while at work, such as gloves, masks and anti-bacterial spray.

These benefits are exempt, however, if you provide them to employees who have physical contact or proximity to customers or who are involved in cleaning premises. If your employee’s specific duties are not covered by this rule, the $300 minor benefits exemption may still apply.

Emergency health care

There is a limited exemption from FBT if you provide emergency health care to employees affected by COVID-19. This only applies to health care treatment provided to an employee on your premises or adjacent to their worksite.

Flu vaccinations and COVID-19 tests

Reimbursing your employees for getting a flu vaccination is exempt from FBT, provided it is offered to all employees. The same applies to COVID-19 testing if it is available to all staff and is carried out by a qualified health professional.

FBT and car fringe benefits

Where employees have been garaging their work cars at home due to COVID-19 there can be FBT implications. Normally, a car fringe benefit arises if an employer makes a car available for private use by the employee, or if it is garaged at home.

During the pandemic, if a home garaged car is not being driven – or only for maintenance purposes – the ATO accepts a fringe benefit is not being provided. If you use the operating cost method and maintain appropriate records, there is nil taxable value for the car and no FBT liability.

Where you are not using the operating cost method or don’t have odometer records, an FBT liability will arise as it’s assumed the car is available for private use.

Logbooks and driving patterns

Where you use the operating cost method with an employee vehicle, during the pandemic you can rely on its existing logbook to make a reasonable estimate of the business kilometres travelled or choose to start a new logbook.

Accommodation, food and transport

FBT does not apply if you provide emergency accommodation, food and transport to an employee if they are at risk of being adversely affected by COVID-19 and the benefit provides emergency assistance.

This assistance can include costs relating to relocating an affected employee and food or accommodation provided due to travel restrictions or a requirement to self-isolate.

Temporary accommodation and meals provided to fly-in fly-out employees unable to return home due to COVID-19 restrictions are also exempt.

New SME exemption coming

You also need to keep in mind the rule change for the FBT year starting in April. The October Federal Budget included the announcement of a new FBT concession for businesses with an aggregate annual turnover between $10 and $50 million.

From 1 April 2021, if your business is eligible it will be exempt from the current 47 per cent fringe benefits tax on car parking and work-related portable electronic devices such as phones or laptops provided to employees.

If you have any questions regarding your Fringe Benefit Tax liabilities, please don’t hesitate to give us a call.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Granny flats- tax tips and traps

Granny flats: tax tips and traps

Granny flats- tax tips and traps

Granny flats: tax tips and traps

The idea of adding a granny flat to your property sounds like a great idea. A property to rent out to generate some welcome extra income, or a home for adult children or mum and dad in their later years.

But there are important tax and personal considerations to consider before taking the plunge and digging up the backyard. Although the Federal Budget proposed significant reform in this area (which we cover later in this article), important tax questions remain.

Tax and granny flats: what you need to know

A granny flat is usually a self-contained secondary dwelling with a separate entrance, bathroom, kitchen and living space.

Unlike an investment property, granny flats do not have a separate title and are built within the boundary of your existing property or attached to your home. A granny flat cannot be sold separately unless you subdivide the existing property title.

Before you rush off to start building, you need to carefully consider the tax implications and get professional advice, or you could find yourself facing significant tax bills.

For example, if you rent out your granny flat at commercial rates to a third party like a student, the rent will be assessable income and you will pay income tax on it at your marginal tax rate. You are, however, entitled to claim the normal deductions for depreciation against income from an investment property.i

Subdividing the property could also create a GST obligation, as the flat may be deemed a new residential property.

Granny flats and capital gains

Under current legislation, the main tax issue when adding a granny flat is that it can create a capital gains tax (CGT) headache when it comes time to sell your home. CGT is payable on the difference in value between the time you bought the property and the time you sell.

Normally, your main residence is exempt from CGT, but adding a granny flat can affect this. If you charge rent to a student living in your granny flat for example, you will lose some of your main residence exemption from CGT as the property is partly being used for income-producing purposes.

When a family member lives in a granny flat and does not pay commercial rent, generally the main residence exemption still applies as the arrangement is deemed private or domestic.

CGT and cash contributions

Things get more complicated if a relative provides a cash sum to help pay for the cost of building a granny flat in return for a right of occupancy for life or life interest.

Under current tax laws, a cash sum paid by one party to build a granny flat is a CGT event. This means if your parent makes a financial contribution towards you building a flat to live in on your property, you will have a partial CGT liability to pay when you eventually sell your home.

To make things worse, the normal 50 per cent discount on CGT for the disposal of an asset held for over 12 months may not be available.

Potential for elder abuse

In many cases, concern about paying CGT means families fail to put formal agreements in place when a relative contributes to the cost of a granny flat. This leaves the family member with no protection if the relationship breaks down and creates the potential for financial abuse.

The family member can also lose out financially if they need to move into an aged care facility, or if the homeowner needs to sell.

It’s also worth noting that an interest in a granny flat can affect social security entitlements and aged care fees.

Proposed Federal Budget exemption

To solve some of these issues, the October 2020 Federal Budget included a proposed CGT exemption for granny flats where a formal written agreement is in place. The new measure will be limited to arrangements covering family relationships and disabled children – not commercial rentals.

Eligibility conditions for the new CGT exemption will depend on the legislation eventually being passed by Parliament. If passed, a start date is expected as early as 1 July 2021.

If you are considering building a granny flat on your property, contact us today to discuss the potential tax implications.

https://www.ato.gov.au/General/property/your-home/renting-out-part-or-all-of-your-home/

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Analysis of Australian Federal Budget 2020-21

Tax and business investment took centre stage in the Federal Budget this year, as the Morrison Government seeks to reboot growth and repair the damage wrought by COVID-19 on Australia’s economy and employment.

Treasurer Josh Frydenberg emphasised the Coalition’s focus on tax by bringing forward the start date for the next round of tax changes. Backdated to 1 July 2020, the measures will provide immediate tax relief for individuals and small businesses. They also represent a significant step in reshaping Australia’s current progressive tax system.

In addition, the reintroduction of measures allowing the carry-back of tax losses and a significant expansion of existing asset write-offs should help support medium and small businesses who have been facing some of the toughest trading conditions in living memory.

Early start to personal tax cuts

At the centre of the tax changes announced by the Treasurer is a new 1 July 2020 start date for the next stage of the government’s tax plan.

Under the Stage 2 changes:

  • The existing low-income tax offset increases from $445 to $700,
  • The upper limit of the 19 per cent tax bracket increases from $37,000 to $45,000, and
  • The upper limit of the 32.5 per cent bracket increases from $90,000 to $120,000.

There is also a one-year extension of the low and middle-income tax offset (LMITO) during 2020-21 worth up to $1,080 for individuals and $2,160 for dual income couples.

Companies gain full asset write-off

For businesses, a major announcement was the introduction of a temporary tax incentive allowing the full cost of eligible depreciable assets to be written off in the year they are first used or installed ready for use. This will also apply to the cost of improvements.

From Budget night, companies with a turnover of up to $5 billion – over 99 per cent of businesses – can fully claim eligible depreciable assets as an expense until 30 June 2022. This will significantly reduce the cost of eligible assets by providing a cash flow benefit.

Temporary carry-back of tax losses

Companies with turnovers of up to $5 billion will also be able to generate a tax refund by offsetting tax losses against previous profits on which tax has been paid. Losses incurred in 2019-20, 2020-21 and 2021-22 can be carried back against profits made in or after 2018-19.

Under the new measure, eligible companies can elect to receive a tax refund when they lodge their 2020-21 and 2021-22 returns. This will help previously profitable companies who are making losses due to COVID-19 access a cash refund to keep their business running, or to take advantage of the new full write-off provision.

JobMaker hiring credit for young employees

Businesses will now be able to access a new JobMaker Hiring Credit if they hire additional employees working at least 20 hours a week.

From 7 October 2020, eligible employers will be able to claim $200 a week for each new employee they hire aged between 16 and 29, and $100 a week for additional hires aged 30 to 35 years old. New employees must have been unemployed or in education prior to hiring.

New jobs created until 6 October 2021 will attract the hiring credit for up to 12 months, with the credit claimed quarterly in arrears from the ATO.

More small business tax concessions

The Treasurer also made several announcements prior to the Budget providing valuable tax concessions for small businesses. From 1 July 2020, the annual turnover test for a range of business tax concessions will increase from $10 million to $50 million. This includes immediate deductions for eligible start-up expenses and prepaid expenditure.

In addition, from 1 April 2021, eligible businesses will be exempt from the 47% FBT on car parking and work-related portable devices such as phones and laptops provided to employees.

From 1 July 2021, eligible business will be able to access simplified trading stock rules, remit their PAYG instalments based on GDP adjusted notional tax, settle excise duty monthly and enjoy a two-year (instead of four-year) amendment period for income tax assessments.

If you would like to discuss how to make the most of these and other Budget announcements, please get in touch.


Unlet Property Rental Tax Issues

Holiday Rental Owners: Beware This Unlet Property Tax Trap

Do you own a rental property that stands vacant for any period of time? Or does your investment property double as a personal holiday home?

Yes? Then this article is for you.

The ATO has warned that claims for deductions relating to rental properties for the Y.E. 2017 will be subject to close scrutiny.Read more


Airbnb Tax Management Australia

Airbnb Hosts - Here’s What You Must Know About Australian Property Tax

As specialist property accountants we look after a lot of clients with Airbnb rental incomes.

Most earn a side income from letting out parts of their own homes. Others have found Airbnb a more profitable way to let out ordinary self-contained rental properties.Read more


If you link Bank A savings account to Bank A investment loan account as an offset account, does the deposit and withdrawal activity in the offset account impact deductibility of interest charged to the investment loan account?

No it doesn't affect the interest deductibility.

This remains the case where you have a savings account linked to your loan account as an offset account.

The savings account and loan account, while linked, are separate accounts.

While deposits and withdrawals in the offset account will increase or decrease the amount of interest charged to the investment loan account, the deposits are not repayments of the loan and the withdrawals are not new borrowings.

The use of the borrowed funds is not affected by the deposit and withdrawal activity in the offset account.