Not directly property related but all the same rules apply - A while back, one of my friends mentioned that he took out a personal loan to buy shares (since he could get a cheaper rate on the personal loan than margin loan due to employment status), but thought the redraw facility was treated for tax the same way as an offset account, so put extra repayments into the loan and redraw as needed to pay for living expenses.
It wasn't until I informed him about losing the tax deduction on redrawn money if not used for investment purposes & linked him to the domjan case that he stopped doing this, but is now in an awkward situation where about 1/3rd of the loan is technically not deductible, and with the share market as low as it currently is, he doesn't want to sell to clear the loan...
Therefore he decided to just pay down the loan asap, claim everything as deductible while it exists, and just hope the ato doesn't find out...
I wonder, though, assuming he doesn't get audited, what are the chances the ato would actually find out? I know the bank interest pre-populates nowadays but ato technology hasn't advanced to the point of auto-checking transaction history in bank accounts & loans has it?
It wasn't until I informed him about losing the tax deduction on redrawn money if not used for investment purposes & linked him to the domjan case that he stopped doing this, but is now in an awkward situation where about 1/3rd of the loan is technically not deductible, and with the share market as low as it currently is, he doesn't want to sell to clear the loan...
Therefore he decided to just pay down the loan asap, claim everything as deductible while it exists, and just hope the ato doesn't find out...
I wonder, though, assuming he doesn't get audited, what are the chances the ato would actually find out? I know the bank interest pre-populates nowadays but ato technology hasn't advanced to the point of auto-checking transaction history in bank accounts & loans has it?
