Private ruling: Deductibility of loan interest
Date of advice: 17 November 2025
Published: 5 January 2026
Ruling period: Year ended DD MM 20YY
Date scheme commenced: DD MM 20YY

Ruling: Q1: Are you solely entitled to claim a deduction for the interest expenses incurred on a joint loan used to purchase income-producing shares that you solely own, under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes.

Relevant facts and circumstances: You and your partner purchased your principal place of residence (PPOR) in 20YY. The title of your PPOR and the mortgage are in joint names. You and your partner have a loan with XX. You provided a copy of the Letter of Offer from XX dated DD MM 20YY. The loan of $X consists of Loan Account 1 of $X and Loan Account 2 of $X. Loan Account 1 has a loan term of X years from the date you first draw on the loan and the loan purpose is xx. Loan Account 2 has a loan term of X years from the date you first draw on the loan and the loan purpose is Investment xx. Loan Account 2 will be used to purchase income-producing shares in your name only. You intend to implement a debt recycling strategy, refinancing with a split loan. The investment portion of the loan will be in joint names, but the investment asset will be solely in your name. The investment loan will be used exclusively for investment purposes (ie solely to purchase shares). The interest expense is not capital, private or domestic in nature. The funds are not used jointly or for private purposes. Funds are transferred from the joint investment loan to your brokerage account and used solely by you to purchase shares for investment with you share account. Once shares are purchased, expenses will include interest on the investment split loan and brokerage fees. You provided confirmation of the purchase of shares in XX total cost $X and XX total cost $X. Total amount $X. There is a small residual balance of $X remaining uninvested. This amount was transferred back to the investment loan to ensure that all interest accruing on the investment relates solely to the funds used to purchase the shares.

Relevant legislative provisions: Income Tax assessment Act 1997 section 8-1