Investing in someone else's access bond

[Coasti]

My grandfather have a small investment that recently paid out, however he do not want to commit into reinvesting at the moment, rather check out the conditions for a while. The best rates he can get at the bank for short term deposits are around 6%.
I have a home loan that I am paying interest on, say 9%.
What are the implications if he "invest" his money in my access bond and I pay him 9% interest and repay his capital whenever he made up his mind? I don't think I will charge him a premium, I just don't want to loose anything.
Any thoughts on risks involved, tax implications etc?

 

[akescpt]

let him take the 6%. less hassles.

 

[rodga]

capitec savings account?
https://www.capitecbank.co.za/global-one/save/rates-and-fees

 

[Frikkenator]

I would imagine it's quite simple, you "borrow" the money from him at an interest rate of x%. Should be no tax implications on either side. But then again what I know about tax is quite dangerous.

 

[Napalm2880]

I've done something similar where a family member contributed towards my bond but I'm paying him back at 0% interest. In my case I got a lawyer to draw up a loan agreement that states the agreement is "not at arm's length" and thus falls outside of Act 35/2005 of the NCA to keep SARS happy. In your case it may not be so simple as you're paying him interest on his "investment".

Other considerations are if one of you dies. So if in the event your grandfather dies, it becomes an issue with the executor of his estate. I could be wrong but I think the law requires you pay back the capital amount within 30 days.

 

[borga]

I would imagine it's quite simple, you "borrow" the money from him at an interest rate of x%. Should be no tax implications on either side. But then again what I know about tax is quite dangerous.

Any interest you pay him wil have to be reported as income by him, as he is likely above 65, his interest exception is 34,500 for the 2015 tax year, so only if his total interest (from you and other sources) are above that amount would it result in him paying tax on any interest above teh R34,500 exemption.

 

[HavocXphere]

I got a lawyer to draw up a loan agreement that states the agreement is "not at arm's length" and thus falls outside of Act 35/2005 of the NCA to keep SARS happy.

eh what? That doesn't make any sense at all - in fact its all back to front. SARS freaks out when things are "not at arm's length" exactly because that implies value was transfer that should have been taxed. And the NCA has nothing to do with SARS.

Feel free to PM me the name of these supposed lawyer so that I know whom to avoid...