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Refund of loan interest - SA return

error by bank led to a refund - where is it disclosed?

I am after some guidance, if I may..

Client has received a refund from the bank on a loan (where the banks paperwork was drafted incorrectly, so they have refunded the loan interest charged over the period).  Said loan was used to fund a property portfolio and, the loan interest (previously paid) has been included in the b/f property losses.  

The refund is fully taxable but where is it disclosed?  Would it be included as a credit in the loan interest payable within the property pages or separately disclosed as other income received - eg interest?  If included within property pages, it would utilise the b/f property losses.  This seems the most obvious place but am not sure it is actually where it should go.  ie is it now treated as income seperate from the property portfolio?  If it is included within Investment income, it would be fully taxable and the b/f property losses would continue to carry forward (property portfolio is now profitable), so would be utilised in next couple of years (ie won't be stuck).

Has anyone had anything similiar?

Thanks in advance for any comments.

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06th Dec 2018 15:53

I don't see any reason why it wouldn't be considered income of the property business.

Surely when any expense is refunded, the first and most obvious place to post it is wherever the original expense was posted?

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06th Dec 2018 15:54

I'd probably reduce brought forward property losses and make some white space disclosure.

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07th Dec 2018 10:34

If it is a rental property loan as the tax situation for the treatment of interest is different to previous years you may get a strange result

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By lja20
07th Dec 2018 10:55

Thanks for commenting, going to include it within property pages as part of rental income and white space the treatment.

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07th Dec 2018 11:11

Since when did a rebate of interest become rental income? I think it should go under interest paid hence my comment about the change of disclosure method

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By lja20
to bernard michael
07th Dec 2018 16:12

I agree, it is a fudge - to make it work within the return - hence the white space - it is also, I assume an untypical scenario!

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to lja20
07th Dec 2018 16:33

You are going for a hard fudge when a soft fudge is available and kinder to your teeth.

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