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Kudos to that Rob. Taxable Income = Assessable Income - Allowable Deductions Each one has their own definition and case law and you can never ever equate the 3 terms.

Technically, perhaps. But the Courts don't interpret legislation literally - they read down provisions like this if it results in unconscionable outcomes that go against the intentions of the legislature.

Yes but the test is whether there is a 'scheme' in place. It is hard to argue that paying your private living expenses or holiday is a 'scheme' to minimise tax.

Hmm don't forget that the IP income is not taxed until you do your tax return so until then it's basically tax-free money.

Kudos Shadow. It is all a bullying match - under the tax law you are presumed to be guilty unless proven otherwise through an (expensive) court of law.

Too true Mry. It doesn't matter what the ATO's opinion is - what matters is how the Courts view the interpretation of Part IVA in accordance with case law and the statute itself.

For construction loans definitely due to the lack of cashflow for servicing interest repayments each month.

Guess businesses better stop making tax deductions on their business expenses too since this could be a scheme too!

'Washed sales'. It's funny how the ATO wastes time on red herrings like this when all they need to do is audit any restaurant in Chinatown to collect money easily.

The only time you'd really capitalise interest is for short-term funding like construction. Other than that you seem to be asking for trouble.