This tax season, we’ve seen a surge in questions about whether interest on a loan can be claimed as a tax deduction. It’s a great question as the way interest expenses are treated can significantly affect your overall tax position. However, the rules aren’t always straightforward. Here’s what you need to know. The purpose of the loan The most important thing when looking at the tax treatment of interest expenses is to identify what the borrowed money has been used for. That is, why did you borrow the money? For interest expenses to be deductible you generally need to show that the borrowed funds have been used for business or other income producing purposes. The security used for the loan isn’t relevant in determining the tax treatment.  Let’s take a very simple scenario where Harry borrows money to buy a new private residence. The loan is secured against an existing rental property. As the borrowed money is used to acquire a private asset the interest won’t be deductible, even though the loan is secured against an income producing asset.  Redraw v offset accounts  While the economic impact of these arrangements might seem somewhat similar, they are treated very differently under the tax system. This is an area to be especially careful with. If you have an existing loan account arrangement, you’ve paid off some of the loan balance and you then use a redraw facility to access those funds again, this is treated as a new borrowing. We then follow the golden rule to determine the tax treatment. That is, what have the redrawn funds been used for? An offset account is different because money sitting in an offset account is basically treated much like your personal savings. If you withdraw money from an offset account you aren’t borrowing money, even if this leads to a higher interest charge on a linked loan account. As a result, you need to look back at what the original loan was used for. Let’s compare two scenarios that might seem similar from an economic perspective: Example 1: Lara’s redraw facility Lara borrowed some money five years ago to acquire her main residence. She has made some additional repayments against the loan balance. Lara redraws some of the funds and uses them to acquire some listed shares. Lara now has a mixed purpose loan. Part of the loan balance relates to the main residence and the interest accruing on this portion of the loan isn’t deductible. However, interest accruing on the redrawn amount should typically be deductible where the funds have been used to acquire income producing investments. Example 2: Peter’s offset account Peter also borrowed money to acquire a main residence. Rather than making additional repayments against the loan balance, Peter has deposited the funds into an offset account, which reduces the interest accruing on the home loan. Peter subsequently withdraws some of the money from the offset account to acquire listed shares. This increases the amount of interest accruing on the home loan. However, Peter can’t claim any of the interest as a deduction because the loan was used solely to acquire a private residence. Peter simply used his own savings to acquire the shares. Parking borrowed money in an offset account We have seen an increase in clients establishing a loan facility with the intention of using the funds for business or investment purposes in the near future. Sometimes clients will withdraw funds from the facility and then leave them sitting in an existing offset account while waiting to acquire an income producing asset. This can cause problems when it comes to claiming interest deductions.  First, even if the offset account is linked to a loan account that has been used for income producing purposes, this won’t normally be sufficient to enable interest expenses incurred on the new loan from being deductible while the funds are sitting in the offset account.  For example, let’s say Duncan has an existing rental property loan which has an offset account attached to it. Duncan takes out a new loan, expecting to use the funds to acquire some shares. While waiting to purchase the shares, he deposits the funds into the offset account, which reduces the interest accruing on the rental property loan. It is unlikely that Duncan will be able to claim a deduction for interest accruing on the new loan because the borrowed funds are not being used to produce income, they are simply being applied to reduce some interest expenses on a different loan. To make things worse, there is also a risk that parking the funds in an offset account for a period of time might taint the interest on the new loan account into the future, even if money is subsequently withdrawn from the offset account and used to acquire an income producing asset.  For example, even if Duncan subsequently withdraws the funds from the offset account to acquire some listed shares, there is a risk that the ATO won’t allow interest accruing on the second loan from being deductible. The risk would be higher if there were already funds in the offset account when the borrowed funds were deposited into that account or if Duncan had deposited any other funds into the account before the withdrawal was made. This is because we now can’t really trace through and determine the ultimate source of the funds that have been used to acquire the shares.  To do list It’s worth reaching out to us before entering into any new loan arrangements. In this area, mistakes are often difficult to fix after the fact, which can lead to poor tax outcomes. That’s why getting advice from a tax professional before committing to a loan is essential. We can work alongside you and your financial adviser to ensure your loan is structured in a way that makes financial sense and protects your tax position. Being across the above updates will enable you to have more control over your cash flow, compliance risk and strategic planning. If you have questions about how these changes affect your business or personal situation, Collins Hume is always here to help.

The aged care system in Australia is complex and confusing … And it’s about to become even more so with widespread changes now timetabled for 1 November this year.  Sometimes, people need to move fast in a system where the aged care journey is typically very slow and cumbersome. Running community forums on aged care, people contact me to want to attend and I hear the words, “I / we want to come along to your aged care event.  It’s not us yet.  We just want to come along to listen and get some information.” That’s totally fine.  But there are a number of things you can do / control to make the journey smoother and faster if you actually find yourself in that situation at some future time. Here are some things to consider and hopefully do now rather than wait for a crisis. 1. Get your legal documents done / reviewed Make sure you have a Will, an Enduring Power of Attorney (financial matters) and an Enduring Guardian (health & care matters). If you don’t have these and you are able to – make sure you see a Solicitor and get them done. If you have these documents already (or think you have) but they were done some time ago – make sure you know where the originals are stored and review them to ensure they accurately reflect your present wishes and expectations. Ensure the person / people nominated for various roles know they’ve been nominated and that they clearly understand their role and responsibilities (especially if they are a friend or neighbour). 2. Register with My Aged Care The aged care journey does not start until you are registered with My Aged Care. It’s a phone call (P: 1800 200 422) to request that you be registered on the system even if you don’t need anything else right now. You may be asked if you want an assessment done – often over the phone there and then.  Up to you if you want to take that offer up. Just get registered. 3. Nominate people who can talk and act on your behalf With organisations like My Aged Care and Centrelink, you can nominate someone to act as a back-up Authority (responsible person) on your behalf if you are unable to for whatever reason. It is wise to have someone nominated and that doesn’t have to be your partner (if you have one). It could be a responsible family member or someone else you implicitly trust (choose wisely). 4. Get all your important documents sorted and together For someone to step into your life to help handle your affairs, it’s important that they know what is expected of them … AND (most importantly) where to find all your important documents. Buying a hard cover folder with plastic inserts to store these documents in one location is an extremely useful exercise. You simply replace the “old” documents / statements with the “new” documents / statements and keep in a place where the important trusted people in your life know where to find the folder. This makes a difficult job so much less stressful rather than having to find and sort through reams of paperwork. Trust me – I’ve seen both sides of the fence with this and I know what side of the fence I want to be on. How Family Aged Care Advocates (FACA) work Family Aged Care Advocates guide you and your family through this ever-changing aged care maze so you can clearly understand what all these changes exactly mean for your particular situation. Mistakes or misunderstandings can be costly and time-consuming to fix. Feel free to visit FACA at www.familyagedcareadvocates.com.au  or call Shane Hayes on 0411 264 002. Shane Hayes Family Aged Care Advocates

What We Took Away from REimagining Your Business – Forever On Friday 5 September, 100 business owners and leaders joined us in Ballina for REimagining Your Business – Forever , a Collins Hume live event designed to shift the way we lead, grow and create meaningful impact through business. Featuring TEDx keynotes Paul Dunn and Masami Sato, the session delivered exactly what we hoped — clarity, energy and dozens of lightbulb moments that challenged conventional thinking and left attendees motivated to do things differently. We explored what it means to lead in the new transformation economy, how small shifts in strategy can generate big results, and how pricing with purpose can help businesses not just grow, but thrive. The conversations, insights and connection in the room reminded us why face-to-face events still matter — and always will. What’s Next? If you joined us on the day, you’ll have received a follow-up email containing the event resources and presentation materials, along with details of a special Strategy360 offer exclusively for attendees. This offer remains valid — please reach out if you’d like to take the next step. Contact Nathan McGrath at strategy360@collinshume.com.au  or call 02 6686 3000. Join the Giving Movement If you were inspired by the impact of B1G1 and want to bring purpose into your own business, visit b1g1.com/join-us  and use the code GIVING010 to join Collins Hume’s Giving Hive — a global community of businesses making a difference through everyday actions. As part of our own commitment to Business for Good, we’re proud to share that 365 days of clean water were given on behalf of every attendee. Then we doubled it. Thanks to the support of those who came and purchased tickets, the total giving impact reached a remarkable 70,810 days of clean water through B1G1 — a tangible, lasting legacy from a single morning of learning and leadership. A huge thank you to everyone who joined us, and to our Event Partners Business NSW and MYOB for helping make it possible. We’re already planning our next event and look forward to seeing you. Until then, thank you again for being part of a community that believes in growing with purpose — together. #LiveYourLegacy

Collins Hume | We have one focus — YOU —with us, you'll be looking way beyond the traditional horizons most accountants are restricted to. DISCLAIMER. Every effort has been made to offer the most current, correct and clearly expressed information possible within this site. Nonetheless, inadvertent errors can occur and applicable laws, rules and regulations may change. The information contained in this site is general and is not intended to serve as advice. No warranty is given in relation to the accuracy or reliability of any information. Users should not act or fail to act on the basis of information contained herein. Users are encouraged to contact Collins Hume professional advisers for advice concerning specific matters before making any decision?

YOU. That’s all we focus on. You, your family, your wealth and the legacy you (and we) leave. That’s it. Join us on this amazing journey. CLIENT HUB. Tools and resources for our clients. Payments Make payments easily online. Enter your client details, invoice number, amount and your payment preference to pay a Collins Hume invoice. Your Portal Sign into Collins Hume's secure client portal using your MYOB account.

YOU. That’s all we focus on. You, your family, your wealth and the legacy you (and we) leave. That’s it. Join us on this amazing journey. IMPACT. Making a Lasting Impact Together At Collins Hume, our purpose is simple: to inspire business owners to achieve success in powerful and meaningful ways. True success goes beyond financial growth. It’s about creating a positive, lasting legacy that benefits our local community and the world—a living legacy that will endure for future generations. We’re proud and feel privileged to live, work, and contribute to one of the most beautiful and prosperous regions in Australia. Every day, our efforts support the beauty and success of our community, and we’re committed to giving back to ensure its continued prosperity. But our impact extends far beyond our local communities. Like you, we care deeply about a better future—for your family and families worldwide. Access to essentials like clean water, education, and food is a cause we all share. Like you, we care deeply about a better future—for your family and families worldwide. Access to essentials like clean water, education, and food is a cause we all share. Through our partnership with B1G1, every time you engage with Collins Hume, you’re helping make a meaningful difference on a global scale. We sincerely thank you for partnering with us. Through our shared commitment to purpose-driven success, we’re not just building a better future for you but helping create a better world. As a Business For Good, we can (and do) change lives.