The ATO estimates that incorrect reporting of rental property income and expenses is costing around $1 billion each year in forgone tax
revenue. A big part of the problem is how taxpayers are claiming interest on their investment property loans.
We’ve seen an uptick in ATO activity focussing on refinanced or redrawn loans. This activity is a result of a major
data matching program of residential property loan data from financial institutions from 2021-22 to 2025-26. This data is being matched
to what taxpayers have claimed on their tax returns. Those with anomalies can expect contact from the ATO to explain the discrepancy.
If you have an investment property loan and redraw on the loan for a different purpose to the original borrowing, the loan account becomes a
mixed purpose account. Interest accruing on mixed purpose accounts need to be apportioned between each of the different purposes the money
was used for.
On the other hand, if the redrawn funds are used to produce investment income, then the interest on this portion of the loan should be
deductible.
For example, if you have redrawn on the loan to pay for a private holiday, or pay down personal debt, then the interest relating to this
portion of the loan balance is not deductible. Not only will the interest expenses need to be apportioned into deductible and non-deductible
parts, but repayments will normally need to be apportioned too.
Withdrawals from an offset account are treated as savings rather than a new borrowing. If you have a loan account and an interest offset
account is attached to this account that reduces the interest payable on the loan, withdrawing funds from the offset account will typically
increase the amount of interest accruing on the loan, but won’t change the deductible percentage of the interest expenses.
That is, when you withdraw funds from the offset account this is really a withdrawal of savings and won’t impact on the extent to which
interest accruing on the loan account is deductible.
If you have a home loan that was used to acquire your private home and you have funds sitting in an offset account, withdrawing those funds
to pay the deposit on a rental property won’t enable you to claim any of the interest accruing on the home loan.
However, if you redraw funds from the home loan to acquire a rental property then interest accruing on this portion of the loan should
be deductible. The tax treatment always depends on how the arrangement is structured.
Think you might have a problem? Contact us and we can investigate the issue before the ATO contact you.
Treasury has released exposure draft legislation for Payday Super that will require employers to pay superannuation at around the same time as salary and wages are paid to the employee. The changes are proposed to commence from 1 July 2026.
Shannon Smit dives deep into the compelling world of using self-managed super funds (SMSFs) to invest in property. With her signature energy and expertise, Shannon explains the mechanics of SMSFs, contrasting them with retail and industry super funds, and revealing the unique power they offer individuals to take control of their financial future.
What does it take to turn a modest property portfolio into a self-sufficient powerhouse? In this episode of The Accountant That Builds, Shannon Smit invites you into the fascinating journey of property investment, revealing the key steps, strategies, and mindset shifts that can transform two properties into a thriving, cash flow-neutral portfolio.
The Government’s big moment in the 2025-26 Federal Budget was the personal income tax cuts. Income tax cuts are a dazzling headline but in reality they deliver a tax saving of up to $268 in the 2026-27 year, with a tax saving of up to $536 from the 2027-28 year.
Paying off your mortgage is a significant financial milestone, but once you’ve reached the halfway mark, what’s the best next step? Should you continue aggressively paying it down, start investing, or focus on building your superannuation?
If you’re wondering whether it’s possible to finance your wedding, the answer is yes. A wedding loan could help cover your expenses while allowing you to spread the cost over time.
Self-Managed Super Funds (SMSFs) offer Australians greater control over their retirement savings, and property investment is one way people can take advantage of this flexibility.
Retail fitouts require a strategic approach to attract customers and drive sales. A visually appealing and functional layout can influence purchasing behaviour, making the investment critical.
Retirement is a major life milestone, and planning for it requires careful financial preparation. With people living longer and enjoying more active retirements, having a well-structured superannuation plan is crucial. If you’re aiming to retire at 60, how much super do you need?
With the right strategy and financial discipline, borrowers can take full advantage of rate cuts and get ahead on their mortgage, potentially saving hundreds of thousands in interest.
Small businesses with a history of non-compliance may be required to transition to monthly GST reporting starting in April, as part of an initiative by the Australian Taxation Office.
How a trust distribution resolution is worded directly impacts the tax liability. It is important not because it determines what is taxable but because it is the basis for determining where the tax liability falls.
The latest Office Market Report from the Property Council has found that CBD office vacancy experienced only a marginal increase from 13.6 to 13.7 per cent over the six months to January 2025.
The Australian commercial property market has demonstrated remarkable resilience, with foreign investment surging particularly in the final quarter of 2024
Commercial property investment is set to surge in 2025, with premium assets in key CBD locations.
One of the most effective ways to gain a competitive edge is by attending business conferences, where industry leaders, experts, and innovators come together to share knowledge, insights, and opportunities.
Equity is the difference between what you owe on the loan and the car’s trade-in value.
Rental growth is expected to moderate to between 3.5% and 4.5% over the next two years, down from the peak of 7.8% observed in March 2024.
Self-Managed Super Funds (SMSFs) offer Australians greater control over their retirement savings, and property investment is one way people can take advantage of this flexibility.
Self-Managed Super Funds (SMSFs) offer Australians greater control over their retirement savings, and property investment is one way people can take advantage of this flexibility.
Purchasing a home as a couple is a major financial and emotional milestone. Beyond simply owning property together, it signifies a long-term commitment to shared financial and lifestyle goals.
The November CPI print showed that monthly trimmed mean inflation decelerated from 3.5% to 3.2%. While services and housing inflation continued the downward trend, electricity prices surprised to the upside after various subsidies came off.
Business owners with private companies must understand Division 7A of the Income Tax Assessment Act when withdrawing funds. Unlike wages or dividends, these withdrawals may be treated as loans or drawings, and Division 7A ensures they are not automatically tax-free, preventing potential tax implications.
Asset finance is a flexible funding solution that allows businesses to acquire essential equipment without paying the full cost upfront.
In the lead up to 30 June, we want you to know why using a bucket company can be a great strategy for saving tax on trust profits distributed.
Smit is well-known for her years of international and local experience, expertise in niche areas, small business tactics and her recruitment process for young up-and-comers.
Aged care financial planning is a highly specialised area that requires not only financial expertise but also an understanding of the
emotional challenges families face. In this episode of The Accountant That Builds, host Shannon Smit sits down with Aged Care Financial
Advice specialists to unpack the complexities of aged care funding.
In today’s fast-paced world, productivity has become a paramount concern for professionals and business owners alike. We constantly strive to optimise our workflows, eliminate inefficiencies, and maximise the value we derive from every minute of our day. One of the key steps in achieving this is recognising the habits and tasks that drain our productivity and replacing them with more effective strategies.
Manufacturing PMI in November increased to roughly 50, hovering near the breakpoint between expansion and contraction.
Rising living costs have made it tricky for many Australians to make ends meet.
If you own your own home, you’ve benefited from rising property prices – but only on paper.
This article provides you with a guide to broaching this sensitive subject gently and productively, so your loved ones feel heard and respected.
Purchasing early in the year can provide six months of tax benefits, and various financing options are also available, including no-deposit solutions.
With summer well and truly here, and perfect boating weather on the horizon, many Aussies are looking at the best way to finance their dream vessel.
In this episode of the podcast, host Shannon Smit sits down with the dynamic and globally renowned futurist Steve Sammartino to discuss the transformative power of Artificial Intelligence (AI) and what it means for businesses, society, and the future.
The age pension in Australia has recently seen an increase in payment rates, making it a more attractive option for retirees. And here’s the good news: you don’t need $1 million in the bank to live like a millionaire in retirement.
The report reveals that 84 per cent of first-home buyers preferred to purchase sooner with a smaller deposit, rather than delay their purchase to save more.
The scheme allows eligible Australians to purchase property with the government contributing up to 40 per cent of the purchase price for new homes and 30 per cent for existing properties.
Mortgage brokers have access to a broad panel of lenders, ranging from major banks to specialist lenders.
Equipment finance offers a flexible solution for acquiring the assets your business needs without significant upfront costs.
Commercial properties showed remarkable strength in 2024, with the essential service sectors driving significant growth across the Australian market.
Creating an effective budget is crucial for successful saving. One way to do this is to set up multiple debit cards for different spending categories.
Debtor finance is a financial arrangement where a business uses its accounts receivable (unpaid customer invoices) as collateral to secure funding.
Asset finance can be a powerful tool to help businesses work their way through the season smoothly while setting up for long-term growth.
The Australian commercial property market is set for a rebound in 2025, amid changing market conditions and renewed investor interest expected to lead the recovery.
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Tax planning is more than just a financial necessity—it's a strategic advantage for businesses of all sizes. By proactively managing your tax strategy, you can significantly reduce your liabilities, enhance cash flow, and ensure full compliance with ever-evolving tax regulations.
