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lizzie said:i posted this elsewhere as have been churning for a while.
i note that australian capital reserve advertise 8% interest on their investments over $20k paid quarterly or compounded and paid annually. what is to stop anyone borrowing $100k loc at 7% locked for 1-5 years and investing in these? that way the income from the interest is higher than the interest paid on the loc ...
thoughts from anyone who knows more than i (which will be most of you) ...
p.s. great thread - i now understand cashbonds, although, from what i gather, nodoc's may kill them off as a cashflow source.
Why would anyone tie up $100,000 of capital to make a profit of $20 a week?lizzie said:i note that australian capital reserve advertise 8% interest on their investments over $20k paid quarterly or compounded and paid annually. what is to stop anyone borrowing $100k loc at 7% locked for 1-5 years and investing in these? that way the income from the interest is higher than the interest paid on the loc ...
Bill.L said:Oh and by the way can anyone tell me how to spell Westpoint?? I've heard that you can get a very good financial return from them using borrowed money. It must be true, my licenced financial adviser told me so.
bye
CFS MIF - Global Resources Fund
S&P Rating- 5
Sector- Equity Region World General
Min Invest- $1000
MER-2.25%
3 Month- -0.89%
1 Yr- 57.64%
3 yr- 38.13%
Smallco Investment Fund
S&P Rating- 5
Sector- Equity Region Australia Mid/Small Blend
Min Invest- $40000
MER- 2.15%
3 Month- 6.22%
1 yr- 35.49%
3 yr- 42.68%
thedude said:disregard, my head was very heavy at the time of posting before . For some reason i forgot, i wouldnt be able to claim the LOC interest as tax deductable once the cashbond has been completely paid out. So no point in my circumstances.
Thanks all
Damon
Rixter said:Damon,
You wouldnt have been able to claim a deduction in the first instance anyway. The purpose of the cashbond has to be for income producing purposes, ie you needed a CB to allow you to keep borrowing to purchasing Investment property. - Not as in your intent to shift deductability.
In the ATO's eyes its the purpose or intent for the borrowings thats determines deductability or not.
Hope this helps.
thedude said:Hi Rixter,
Correct me if im wrong, but i thought it was the purpose of the loan has to be for income producing purposes not the cashbond?
I assume the cashbond is deemed an investment by the ATO and therefore interest on borrowed funds to buy one would be deductable.
I dont think ive got the cashbond thing down yet
Cheers,
Damon
thedude said:Umm, nearly. Sorry, I just really want to understand this.
Disregarding what you use the cashbond income for. Is a Cashbond an investment that the ATO would say, "yes, this is an investment".
If so, borrowings to buy the cashbond would be tax deductable? Just like borrowings to buy an IP, shares, business etc would be tax deductable?
If its not deemed an investment by the ATO, and the ATO says "You must use the income from a Cashbond for investment purposes", then yes, i think i get it.
Cheers,
Damon
dtraeger2k said:IMHO, just get a lodoc loan and avoid all the hassle. It's a cheaper alternative, too.