SAIM10030 | Relief for interest paid: general conditions: the claimant

The person making the claim

Claims for interest relief can only be made by the person that:

• takes out the loan, and

• pays the interest on the loan, and

• applies the funds from the loan in a form that meets the qualifying conditions.

Matters can become complicated where a husband and wife take out a joint loan.

Joint Loans

Where a husband and wife take out a joint loan but only one spouse uses the loan in a form that meets the qualifying conditions, that spouse would be entitled to full relief on the relevant amount of interest paid, even if the joint liability is satisfied out of a joint account.

Where a husband and wife take out a joint loan, with the liability to pay interest on the loan being paid from a joint account, and both use the loan in a form that meets the qualifying conditions, each spouse would be entitled to relief on the interest paid in proportion to their relevant qualifying investments.

However, where one spouse takes out a loan which is then used by both a husband and wife to invest the money in a form that otherwise meets the qualifying conditions, relief would only be available to the spouse that took out the loan. The relief would be in proportion to the relevant amount of qualifying investment made by the spouse taking out the loan. This is because the loan has to be used by the individual to whom the loan was made. Under these circumstances, the amount invested by the spouse who did not receive the loan has not been used to make a qualifying investment by the spouse who received the loan. That amount has been used to enable someone else to make an investment.

For examples on the relief available where there are joint loans, see SAIM10040.