Assalaamualaikum brothers and sisters,
I am switching from full-time employment to part employment and part self-employment. For tax purposes, it would benefit me cash-wise, if I received up to 5k from my company in the form of interest (“savings” income on tax return) which is taxed at 0%. I am the sole owner. Can I put money into my own company as a director’s loan and charge it interest (essentially charging myself)? Does it still count as riba if I am only charging myself as a tax efficiency thing? I am merely taking my own money with no other shareholders. I may appoint my wife as another director to use her tax-free allowance as well but the money in the company was still injected by only myself and my money is shared between us anyway.
Thank you and I look forward to your response.
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Wa alaykum salaam,
If you are the sole director and owner of your company, and you are inserting money into your company, then it is not really a Qard as you own the assets of the company too. As such, this will not be Riba and merely accounting conventions and tax efficiency.
Allah knows best
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Thank you very much, sir!