What is everyones opionion on this?
I received it on a e-mailing list i am subscribed to…
Two weeks ago the Australian Financial Review (as well as every other weekend newspaper) ran a story about a couple who challenged the ATO and won! I have edited an article from The Australian into bullet point form.Ruling hits Tax Office August 04, 2002
Home owners will be able to claim interest on their home loans as a tax deduction for the first time as a result of a controversial Federal Court ruling this week.
Tax deductibility for the family home would be available only to people who are also paying off an investment property at the same time.
The Australian Taxation Office is likely to vigorously contest the Full Bench ruling in the High Court
The decision means that investors will be able to make their home loan mortgage more tax effective and pay it off faster while accumulating another investment as all repayments on an investment property could be delayed until the owner-occupied home loan was paid off, while the entire compound interest was tax deductible.
National Tax and Accountants Association president Ray Regan commented “This will have tremendous appeal for thousands of owner-investors and will potentially open the floodgates,” he said. “People will be able to use the equity in their existing home to purchase a second home and the interest on both will be tax deductible.”
The quote at the bottom of my emails says “Many receive advice, only the wise profit from it”, so if you have a home loan and an investment loan what are you going to do now?Most people will have an excuse why they’ll do nothing, it’ll probably be “ATO is likely to vigorously contest the ruling, I’ll wait and see what happens”
If anyone can shed some more light on this for me, it would be greatly appreciated.
Pete
Edited by – [email protected] on 20/08/2002 5:18:26 PM
This topic was on ACA monday night. Other than ATO most ppl think it is legal practice.
CY
All,
I would be very careful before attempting to make use of this loophole. Things like this have happened in the past where the courts have ruled against the ATO and the investor has won… in the short term. However the ATO will publicly announce that they don’t agree. Then the government will realise how much money they will be loosing in lost tax. Then new legislation will be passed to close the loophole, however it won’t just be for future cases they will back date it to when the ATO first publicly announced their disapproval.
Hence if you do flaunt this loophole now and legislation is passed in the future then you will be up for a fair sum in back taxes… be warned.
regards,
Nigel.
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