simple loan from relative

[RexS9999]

My father in law in a third world country wants to help me buy a house in a developed country. He has a simple loan agreement made up. He wires the money to me, say $75 K USD. I go to the bank with a copy of the loan contact. Explain where the money is from and the purpose. In a situation like this will the tax authorities in my developed country want to see bank statements from my father in law showing where he got the money? There are wealthy people in the third world. Has anyone done anything like this?

 

[TheCryptoAnt]

Prolly not but having papers ready wont hurt

Which developed country tho?

 

[RexS9999]

Australia

 

[TheCryptoAnt]

You are probably ok I think.

If the source is shady, have some papers to show just in case.

 

[Martin Everson]

My father in law in a third world country

Which third world country I would ask first? Money coming from certain high risk third world countries especially large amount in USD are scrutinized under a microscope. So if money came from Nigeria, DRC etc you may get asked questions.

He wires the money to me, say $75 K USD. I go to the bank with a copy of the loan contact. Explain where the money is from and the purpose.

Totally wrong order. You go to bank first and explain the situation, money, source, purpose etc. Then if all is good with bank then you ask him to wire money.

In a situation like this will the tax authorities in my developed country want to see bank statements from my father in law showing where he got the money?

If payment is stopped they will ask source of funds and whether they will require supporting paperwork is another question.

See the below anyway.

Do I have to pay tax on money transferred to or from Australia?

Considering the role tax may play in your international money transfer is an invaluable exercise and could save you a hefty fine down the track.

mozo.com.au

I would speak to your accountant to make sure everything is done correctly and enough info is kept to please ATO.

 

[RexS9999]

The money would be from the Philippines. Appreciate all the replies, thanks

 

[TacitusKilgore]

Keep in mind the loan with your father-in-law will almost certainly reduce your borrowing capacity in Australia since the bank takes that into account as existing debt.

As you're probably aware it's unlikely to be considered "income" since it's actually a loan and there is an agreement in place explicitly confirming so.

As others have said having documents to help you wouldn't be a bad thing. It's possible -- and I'm not sure of the likelihood of this happening -- that the bank will ultimately want to "look through" the loan and determine the ultimate source of those funds. In other words, were they originally obtained illegally by your father-in-law, etc.

Good luck!