Family loans under the microscope

A recent Queensland Court case between elderly parents and their son has shed considerable light on what must be proved in order for moneys which are transferred to a family member to be recognised as a loan, rather than a gift.

The facts in the case of Bergham & Anor v Bergham were as follows:

• throughout 2009, the son's business was under significant financial stress;
• after the son approached his parents, the father arranged for $98,000 to be transferred to the son;
• the son continued to ask for further moneys and the father complied, arranging for further transfers to be made to the son;
• in late 2012, the son asked to borrow his father's credit card and incurred further expenditure of $13,471.09 on that card; and