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## Understanding Brad’s Tax Situation

A friend of mine, let’s call him Brad, claims deductions on interest paid on is PPOR because he has investments in shares.

So I’ll simplify Brad’s scenario.

Brad buys a PPOR with a standard mortgage with an offset. At this stage he has no other investments. Brad works hard and saves all his money (earned from a normal PAYG wage) and tops up his mortgage offset to completely cover the outstanding loan amount over a few years. Great job, Brad! It’s a standard offset, not a redraw facility.

After a little time, Brad looks into the share market. He uses funds from his offset account to purchase some shares. Non dividend shares.

Tax time comes around, Brad claims the PPOR interest (which started accruing after he made withdrawals from the offset) as a deduction.

Is this an allowed deduction?

I’ve read a bunch of guides/TRs etc, and I don’t think he can. Otherwise wouldn’t everyone just do it?

As I’m no tax expert, I am just trying to work out if I can do the same…. 😉

## How AI Legalese Decoder Can Help

The AI Legalese Decoder can help provide clarity on complex tax laws and regulations related to claiming deductions on interest paid on a principal place of residence (PPOR) when having investments in shares. By inputting the specific details of Brad’s scenario into the AI system, users can receive detailed explanations on whether such deductions are permissible under current tax laws. This can assist individuals like Brad in making informed decisions regarding their tax situations and ensure compliance with legal requirements. Additionally, the AI Legalese Decoder can offer insights into potential risks and pitfalls associated with claiming certain deductions, helping individuals avoid costly mistakes and penalties in the future.

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View Reference


  • Sancho_in_the_bay

    Brad will be getting a call from the ATO at some stage in the future

  • ww2_nut37

    OP is totally ‘Brad’ 😂😂

  • The-truth-hurts1

    Brad is using money from the offset.. Brad is not borrowing money for shares.. Brad borrowed money for his house.. Brad is going to get a rude shock

  • Pave

    Needs to be done using redraw not offset then it is allowed

  • xordis

    Brad is not smart, Brad is the opposite of smart and committing white collar crime, Brad probably won’t go to prison, but he will get the chance to pay back all the tax deductions along with a fine and probably have his entire tax paying life audited.

    Don’t be like Brad.

  • abc423cba

    There are two reasons why the deduction is not valid. “Brad” would need to pay down his loan with the money from his offset and then draw it back down (ie. To make a new borrowing – ideally in a new loan split).

    Secondly the shares need to be income producing (or have a reasonable expectation of being income producing) for the interest to be deductible.

  • ribbonsofnight

    If shares with no possibility of a dividend then no.

    Must be a potentially income producing asset and it must be clear that you’re borrowing the money for that somehow.

    debt recycling is complicated to those who haven’t done it and I’m one of those people.

  • ks12x

    This wasn’t even a hard thing to get right. Brad thought he was too smart to do his own research or obtain professional advice.

    You don’t get a deduction just because you could have structured your affairs in a way that could get you a deduction but didn’t want to bother with the admin.

  • Flangella-Fairyfloss

    Brad is an idiot and i hope he gets caught, it is not up to the tax payers to cover his interest payments on his PPOR.

  • lililster

    You can do the same except that when you do it you first pay down the loan without closing the loan facility. Then you redraw the loan to purchase the shares.

  • Pure-Athlete1588

    No he can’t claim it, he should’ve transferred the money to redraw and then pull it out to offset agin then invest it, it’s all a silly game really and you have to play by the rules to win. If you skip a step you get in trouble with the ato.

  • arrackpapi

    sounds like brad has misunderstood debt recycling.

  • Spicey_Cough2019

    Brad doesn’t know how deductions work.

    Brad’s going to be getting a debt from the ATO

    Don’t be like Brad.