fbpx

LETS GET DOWN TO BUSINESS.

Question :
How do you account for interest incurred on a revolving credit facility that includes private use?

Question submitted 25/05/20 @ 10:50am
Industry: Funding & Finance
101
VIEW
0
VOTE
  • Hey there – this is super challenging, I asked a contact Dave Armstrong from VegaLend – his guidance
    “More of a question for the clients accountant but if they are looking to see what interest has been charged on a revolving facility the easiest way is a statement from the bank. If the account has been used for personal use also it will be down to the accountant to figure out what can be included in the tax return and make an adjustment. As the facility moves and up and down its hard to calculate manually as you would need to go through the balance each day but he interest is charged monthly by the bank so a bank statement would show this figure.”
    Don’t worry, I am confused too! I suppose this is what accountants are for ..

    Kia ora,

    Are you saying the account is used for both business and private expenses -or- that you’re looking to claim on mortgage interest as an expense for your business (e.g. you might be using part of a house for your business)?

    If the former, then that’s a bit of a mess. You’ll need to split transactions across personal vs. business. I’d recommend a move to a seperate current account (and even credit card) to run your business expenses in the future.

    If the latter – then that’s quite a common scenario. Your accountant will work out how to apportion interest expenses. It’ll most likely be based on portion of property used for the business – but check with your accountant. S/he’ll absolutely know how to take care of this.

  • You must be logged in to reply to this topic.