The ATO estimates that incorrect reporting of rental property income and expenses is costing around $1 billion each year in forgone tax
revenue. A big part of the problem is how taxpayers are claiming interest on their investment property loans.
We’ve seen an uptick in ATO activity focussing on refinanced or redrawn loans. This activity is a result of a major
data matching program of residential property loan data from financial institutions from 2021-22 to 2025-26. This data is being matched
to what taxpayers have claimed on their tax returns. Those with anomalies can expect contact from the ATO to explain the discrepancy.
If you have an investment property loan and redraw on the loan for a different purpose to the original borrowing, the loan account becomes a
mixed purpose account. Interest accruing on mixed purpose accounts need to be apportioned between each of the different purposes the money
was used for.
On the other hand, if the redrawn funds are used to produce investment income, then the interest on this portion of the loan should be
deductible.
For example, if you have redrawn on the loan to pay for a private holiday, or pay down personal debt, then the interest relating to this
portion of the loan balance is not deductible. Not only will the interest expenses need to be apportioned into deductible and non-deductible
parts, but repayments will normally need to be apportioned too.
Withdrawals from an offset account are treated as savings rather than a new borrowing. If you have a loan account and an interest offset
account is attached to this account that reduces the interest payable on the loan, withdrawing funds from the offset account will typically
increase the amount of interest accruing on the loan, but won’t change the deductible percentage of the interest expenses.
That is, when you withdraw funds from the offset account this is really a withdrawal of savings and won’t impact on the extent to which
interest accruing on the loan account is deductible.
If you have a home loan that was used to acquire your private home and you have funds sitting in an offset account, withdrawing those funds
to pay the deposit on a rental property won’t enable you to claim any of the interest accruing on the home loan.
However, if you redraw funds from the home loan to acquire a rental property then interest accruing on this portion of the loan should
be deductible. The tax treatment always depends on how the arrangement is structured.
Think you might have a problem? Contact us and we can investigate the issue before the ATO contact you.
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AI-Enhanced Automation for Accounting and Finance Professionals: Leveraging ChatGPT, Copilot & Claude for Innovation and
Productivity.
Join SkyBots’ 2-day Workshop in GOLD COAST with automation expert Daryl Aw to revolutionise your workflow using
cutting-edge Agentic AI tools including Chat GPT, Claude, CoPilot and Gemini. This workshop is built for accountants,
bookkeepers, finance teams, and business owners who want to move beyond basic prompts and turn AI into a reliable, ethical, and practical
system for everyday work.
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AI-Enhanced Automation for Accounting and Finance Professionals: Leveraging ChatGPT, Copilot & Claude for Innovation and
Productivity.
Join SkyBots’ 2-day Workshop in MORNINGTON with automation expert Daryl Aw to revolutionise your workflow using
cutting-edge Agentic AI tools including Chat GPT, Claude, CoPilot and Gemini. This workshop is built for accountants,
bookkeepers, finance teams, and business owners who want to move beyond basic prompts and turn AI into a reliable, ethical, and practical
system for everyday work.
Lunch & Learn Workshop // 4 September, 2026 - 12:00 - 1:30pm
$35pp includes lunch
Many business owners believe growth comes from more sales. But in reality, the strongest and most profitable
businesses grow by improving how the business works, not just by selling more. This session is designed to change that. The
5-Critical Financial Metrics
is a practical workshop that shows you where small, targeted changes can create disproportionately big improvements in profit, cashflow and
sustainability.
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MP SHIRE SMALL BUSINESS FESTIVAL / LIVE WORKSHOP
Friday 31 August, 4:00pm-6:00pm
Join our practical,
educational workshop designed to help business owners understand the lending process and in preparation for funding conversations, learn how lending decisions are really made and what banks actually look for.
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MP SHIRE SMALL BUSINESS FESTIVAL / LIVE WORKSHOP
Tuesday 25 August, 10:00am-12:00pm
This practical, confidence-building session is designed to give business owners control. Know Your Numbers is a hands-on workshop created specifically for non-financial business owners who want clarity and confidence in their decision-making.
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MP SHIRE SMALL BUSINESS FESTIVAL / LIVE WORKSHOP
Monday 24 August, 5:30-7:30pm
This practical, education-first session helps business owners cut through the confusion and take back control of their business insurance
decisions.
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MP SHIRE SMALL BUSINESS FESTIVAL / LIVE WORKSHOP
Monday 10 August, 5:30-7:30pm
This practical session, in collaboration with the Mornington Peninsula Shire as part of the Small Business Festival, helps small business
owners understand AI and automation and shows how small businesses can use smarter tools to reduce manual work, improve accuracy and
create more capacity for growth.
Conference // 5 August, 2026 - ALL DAY EVENT
The B.I.T.E. Business Conference 2026 is the Mornington Peninsula’s premier event for bold business owners ready to rethink what’s
possible, reinvent how they operate, and reignite their growth. Hear from global keynote speakers including Grant Hackett, Andrew Griffiths
and Kate Christie plus local business innovators.
| SMART Business Solutions is pleased to announce the appointment of Josh Underhill as Partner, recognising his outstanding contribution to the firm and the clients he supports every day. |
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Smart Business Solutions is proud to announce that Ryan Smit, an accounting student at RMIT University and Assistant Accountant at SMART Business Solutions, has been named Accounting Student of the Year, recognised for his forward-thinking approach to the profession and his commitment to integrating AI, intelligent workflows and technology into modern accounting practice.
For many business owners, superannuation is something that gets attention in June — when tax planning comes into focus. But the real opportunity lies in planning your super contributions at the start of the financial year, not the end.
The new financial year has officially clicked over – and with it comes the trio of mid-year obligations every employer needs on the radar: Single Touch Payroll (STP) finalisation, WorkCover declarations, and Payroll Tax annual reconciliation.
On 26 June 2026, the Federal Government passed a significant change to how Self-Managed Super Funds (SMSFs) can invest in residential property. New Limited Recourse Borrowing Arrangements (LRBAs) to purchase residential property inside an SMSF will be banned from approximately 10 August 2026 — 45 days after Royal Assent.
Grant Hackett joins Shannon Smit to share what it takes to perform at the highest level - from Olympic success to leading an ASX-listed business. This episode unpacks the mindset, discipline and leadership habits that drive long-term success, including key lessons on consistency, blind spots and building sustainable high performance.
The First Home Guarantee allows eligible buyers to purchase with a 5 per cent deposit without paying Lenders Mortgage Insurance.
The 2026 Federal Budget proposed the most significant changes to residential property tax settings in a generation.
How a business crosses the 30 June line matters more than many owners realise
From 1 July 2025, interest charges on business tax debt were also deemed non-deductible by the ATO, increasing the real cost of carrying that debt.
Commercial property investors are increasingly focused on asset quality over broad sector performance.
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AI-Enhanced Automation for Accounting and Finance Professionals: Leveraging ChatGPT, Copilot & Claude for Innovation and
Productivity.
Join SkyBots’ 2-day Workshop in MELBOURNE with automation expert Daryl Aw to revolutionise your workflow using cutting-edge
Agentic AI tools including Chat GPT, Claude, CoPilot and Gemini. This workshop is built for accountants,
bookkeepers, finance teams, and business owners who want to move beyond basic prompts and turn AI into a reliable, ethical, and practical
system for everyday work.
.png)
AI-Enhanced Automation for Accounting and Finance Professionals: Leveraging ChatGPT, Copilot & Claude for Innovation and
Productivity.
Join SkyBots’ 2-day Workshop in BRISBANE with automation expert Daryl Aw to revolutionise your workflow using cutting-edge Agentic
AI tools including Chat GPT, Claude, CoPilot and Gemini. This workshop is built for accountants, bookkeepers, finance teams,
and business owners who want to move beyond basic prompts and turn AI into a reliable, ethical, and practical system for everyday work.
A caravan loan can make the upfront cost manageable, but it’s the ongoing expenses that can catch first-time owners off guard.
Fixing your rate can offer certainty, but it also involves trade-offs that are worth understanding before making a decision.
Lenders calculate how much you can borrow based on your income, existing debts, living expenses and other financial commitments.
Business Growth brings its own financial pressures, and cash flow is often where those pressures first show up. It’s a pattern that catches many business owners off guard.
| The Fair Work Commission (FWC) has handed down its 2026 Annual Wage Review, and the numbers are in. From 1 July 2026, the national minimum wage will rise by 5.97%, and modern award minimum rates will increase by 4.75%. |
The luxury residential sector is experiencing uneven performance across Australia's major cities.
For many business owners, superannuation is something that gets attention in June — when tax planning comes into focus. But the real opportunity lies in planning your super contributions at the start of the financial year, not the end.
The new financial year has officially clicked over – and with it comes the trio of mid-year obligations every employer needs on the radar: Single Touch Payroll (STP) finalisation, WorkCover declarations, and Payroll Tax annual reconciliation.
