In an August edition of the Bantacs Newsflash there was a small article about an application for a private ruling which concerned a 'method' of borrowing from a LOC to pay the interest and other expenses of a rental property.
The ATO rejected the method and denied the deductibility of this interest.
The ruling wasn't available at the time (i think they only publish them a month or so later), but it is now.
Private Binding Ruling authorisation number 1011345133229
http://www.ato.gov.au/rba/content.asp?doc=/RBA/Content/1011345133229.htm
Worth a look for anyone contemplating borrowing to pay interest - And it doesn't mean this isn't possible, just that it wasn't possible in this case. Structure it different and it may be.
The ATO rejected the method and denied the deductibility of this interest.
The ruling wasn't available at the time (i think they only publish them a month or so later), but it is now.
Private Binding Ruling authorisation number 1011345133229
http://www.ato.gov.au/rba/content.asp?doc=/RBA/Content/1011345133229.htm
Worth a look for anyone contemplating borrowing to pay interest - And it doesn't mean this isn't possible, just that it wasn't possible in this case. Structure it different and it may be.