Is this still tax deductable

[dee]

Situation A
Ip - loan drawn from equity
money used to buy a managed fund
Personal money also goes into this fund
Are there any problem with this set up
I assume IP equity loan interest is claimable


hypothetically
say 200k equity from IP - into managed fund
50k personal funds into fund


when I withdraw - how does ATO know whether this money is from the IP money or personal money
situation B
what if i then sold the managed funds
and bought units in a hybrid trust that i setup
The money goes into the trust, and i gain units in my personal name,
and buy the same managed fund in the trust stucture

So is interest claimable here too??? - as the asset now is units - which produce income

 

[DaleGG]

Hi

yes, the interest on the $200k withdrawn from equity would be tax deductible because the purpose to which the funds were used was to buy an income producing investment.

If you later withdraw a sum of money it would be wise to apportion the withdrawal between the two types of funds originally deposited as this is the most prudent approach and would be least likely to get you into trouble should you later be audited.

If you sold the managed funds the interest ceases to be deductible until you then use the money in another way - such as buying units in your HDT, as you suggested.

Dale