Meaning of borrowback | Babel Free

Definitions

An arrangement in which an asset is sold or given to another, and then borrowed back from the trust or person to whom it was sold or given. Typically, this is done either to take advantage of a lower tax rate on the part of the one to whom the asset is given, or to allow a trust to earn a higher rate of interest than that available from a bank.

countable, uncountable

Examples

“A borrowback can be used to increase investment yield.”

“There are other income shifting techniques besides trusts, such as gifts with leaseback or borrowback arrangements, family businesses, and loans. But these are tax avoidance measures which rightfully belong in another work.”

“Under the gift and borrowback arrangement, the parent (or other donor) makes a gift of money to the child (or to a custodian or the trustee of a trust) and subsequently borrows the money back from the child at a specified rate of interest.”

CEFR level