thanks for the comments.

So if I use the LOC to purchase new investments, then this is ok to claim deductions? As I close out my existing investments according to my system rules I can then move this money to my home loan. Obtaining the result I wanted but over a longer period. So for tax purposes would it be best to open up a new margin loan account to provide clear seperation between the funds provided by myself versus the LOC?

understand what you are saying about capitalisation.