Loan Deductibility and Accountant Quality

Hey guys,

I only have one IP at the moment which was recently refinanced with the equity converted into a sum of money into the offset account. Previously it had been paid down to about 67% (money paid directly into the mortgage – not offset). With this new sum off money in the offset account I was always planning to use it to buy property and still am but recently decided to amalgamate all my bank accounts under one bank to eliminate the trouble of having many accounts open. Also I thought it would be handy to save some interest. Therefore I decided (in hindsight, wrongly) to use the offset account as a daily transaction account with direct salary crediting to maximise amount of money in there at one time and to use the credit card attached to the loan package. Since then I have already spent a portion of the money in the offset account and also am depositing my rents and salaries into there.

Originally I thought that I had read on the forum that considering before the refinancing we had already paid down the loan to about 67%, that the refinance money would be non tax deductible anyway ('dead money' – akin to that put straight into a PPOR), but I recently engaged an accountant who was advertised as a specialist property tax accountant in order to complete the 2013 return and was told otherwise. They stated that it was a mistake to use even the partial amounts of refinance cash in the offset account for non investment purposes and because of this I have destroyed the deductibility of the money in the offset account. Is that true or not? I always thought that it would have been non deductible anyway? If it is, is there any way to remedy the situation? Someone in the family suggested refinancing again but wouldn't that involving paying down the mortgage to 0 first? Would it be OK to continue direct salary crediting?

The other issue I feel warrants discussing is the quality of this accountant. I feel like they did not offer any real solutions to this issue even after asking and prompting. They simply mentioned to separate the spending but no way to rectify the situation if it has gone bad or even whether or not there is a way. Is it within the role of the accountant to provide such solutions? I know ultimately every decision needs to be made by me but want to query the level of cooperation.

Any feedback is appreciated.

Thanks