Ask Noel
When borrowing to invest in shares, instead of taking out a margin loan or personal loan (at 8 per cent to 14 per cent), could you top up a home loan (at 6 per cent), and would the ATO still allow the interest on this to be tax deductible?
The interest on any loan to produce income-producing assets is certainly tax deductible, but you could find yourself stuck with complicated bookkeeping if you have a single loan that is part deductible and part non deductible. It is much better to have one loan for the non-deductible home loan and another for investment. Most banks will let you have a loan facility that can accommodate different loan splits within it. Interest, whether deductible or not, is still a cost and you should seek out the lender with the lowest interest rates. Also, remember to pay down non-deductible debt before deductible debt - this is usually achieved by having your deductible debt on interest-only terms.
I am 50, on a disability support pension, and will never be able to work again, although my partner works full time. I have some money in a super fund, which is being eaten up with fees at the moment. Can I access this money, and if not, what is the best thing to do with it?
There are ways to withdraw super before your preservation age, however these are limited to severe financial hardship or compassionate grounds, each of which possess differing qualifying conditions and limits to withdrawals. You are also required to pay tax upon the early withdrawal of super, which needs to be considered if you take this route. It sounds as though you're concerned about fees, so consider reviewing your super fund to ensure you are in the most suitable fund relative to your needs. And ensure that the investments are suited to your tolerance to risk and investment time frame.
In a recent article on Centrelink pension entitlements, you advised that the family home is not subject to assessment if it's on land that's smaller than two hectares. My property is just over five hectares, although I'm only allowed to clear half an acre for use and the remainder cannot be developed because of protection requirements. What are the implications of this larger land area in relation to Centrelink entitlements, and what can be done to minimise any effects?
This is quite a complex issue. The best way to approach it would be to talk to the financial-information people at Centrelink and obtain a private ruling from them on the valuation of the land. Given the restrictions, you may find Centrelink will apportion most of the value of the property to the home and surrounding two hectares and your entitlements will not be affected.
The explainer
Savings goal is better late than never
I'm 39 and rent but have no savings and, unfortunately, never learnt the value of saving. However, I want to change and could save $100 a week. What are my best options? Should I take out a loan for an investment portfolio? I have set up an account to pay all my bills following your example. I would like to buy my own property but realise that will not be affordable, so I would like to boost my super and/or savings for retirement.
It's great to see that you have finally made saving and investment a priority. For the next 12 months, I suggest you focus on money management and saving as much as you can in an online savings account. At the end of that time, you could take advice on borrowing for investment - a regular gearing program may be perfect for you.
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Frequently Asked Questions about this Article…
Yes — the ATO allows interest on a loan used to produce income-producing assets (like shares) to be tax deductible. However, if you mix investment borrowing with your home loan in a single facility you can create complicated bookkeeping because part of the interest will be deductible and part won’t. It’s usually cleaner to have a separate investment loan or a loan facility that clearly splits the deductible and non‑deductible portions.
There’s no one-size-fits-all answer. Margin loans or personal loans often carry higher rates (the article mentioned typical ranges like 8–14%) versus a home loan (around 6% in the example), but mixing purposes in one loan complicates tax records. Many banks offer facilities that allow separate loan splits — focus on finding the lender with the lowest interest rates and a clear split between home and investment debt.
Keep investment debt separate from non-deductible home debt. That can mean two loans or a single facility with clearly defined loan splits. This makes it easier to identify deductible interest and to lodge your tax return. Also consider putting the deductible portion on interest-only terms while prioritising repayments on non-deductible debt.
Early access to super before preservation age is limited. You may only withdraw in special cases such as severe financial hardship or on compassionate grounds, each with different qualifying conditions and limits, and early withdrawals are generally taxable. If fees are the concern, review your super fund to find a more suitable, lower‑cost option and make sure the investment strategy fits your risk tolerance and time frame.
This can be complex. The family home is normally exempt if on land smaller than two hectares. If your property is larger but has development restrictions, Centrelink may apportion most of the value to the house and surrounding two hectares. The best course is to speak with Centrelink financial advisers and obtain a private ruling on how they will value the land.
Talk directly to Centrelink’s financial information team and request a private ruling on the property valuation. Explain the restrictions on land use — Centrelink may apportion value so that only the home and up to two hectares are treated as the family home, which could protect your entitlements.
Great to prioritise saving. For the next 12 months focus on money management: build a regular saving habit, use an online savings account for flexibility and emergency buffer, and follow a bill‑pay system so you don’t overspend. After a year you can seek advice about investing or borrowing to invest and think about boosting your super or retirement savings as a longer‑term goal.
Not immediately. The article recommends establishing good money‑management and savings habits first. Once you’ve saved consistently (for example over 12 months) you can consider professional advice on gearing — a regular gearing program might suit some investors, but it’s important to understand the risks and have a solid financial foundation before borrowing to invest.
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