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Tax deductions and share investment

Discussion in 'Accounting, Tax & Legal' started by tetranomad, 18th Mar, 2009.

  1. tetranomad

    tetranomad New Member

    Joined:
    13th Feb, 2009
    Posts:
    3
    Location:
    Brisbane, QLD
    Hi there,

    I have two questions about tax deductibility with respect to buying shares:

    1) If my partner and I take out a line of credit loan against equity in our home, using both names, is the interest tax-deductible when the money is used to buy income (dividend) producing shares? If so, is the tax deductibility 50:50 against each of us, due to the loan being in both our names, or can it be 100% me, if the shares are purchased entirely in my name? Does it make a difference that the LOC would be a loan split from our original PPOR loan?

    2) Considering that I am not a professional investor, and the bulk of my income comes from my day job, are costs associated with investing in shares deductible? Specifically, I'm thinking of books on investing and software used to track shares/investments and research companies?

    Thanks!
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    It is the purpose of the borrowed money which determines deductibility, not the source.

    It depends on who is the owner of the shares as to whether the interest is deductible - if you are joint tenants (ie 50/50 ownership) then you declare half the income each and claim half the costs each.

    The ATO has some guides on investing in shares which you should read.

    Interest and dividend deductions

    You and your shares 2007-08

     
  3. bella

    bella Well-Known Member

    Joined:
    6th Jun, 2007
    Posts:
    48
    Location:
    QLD
    For accounting purposes, make sure your investment borrowings are kept separate from your mortgage - see if the bank will let you set up a separate loan account linked to your mortgage. Otherwise it might be difficult knowing how much of your mortgage is deductable come tax time.
     
  4. angella

    angella Member

    Joined:
    13th Sep, 2008
    Posts:
    8
    Location:
    Moe
    Ok I have been really good this year and manage to save all my 'K Rudd' bonus which has been placed into my redraw mortgage. (Over Ten thousand dollars) I now want to pull it out and buy units in a managed fund.

    As this strategy is tax deductible what records do I need to keep? Do I need separate borrowings from my mortgage?

    I am waiting for my copy of 'you and your shares' from the ATO as we speak.

    I keep emailing my accountant this question but its a bit like extracting teeth.

    Does anyone have a spread sheet?
     
  5. AsxBroker

    AsxBroker Well-Known Member

    Joined:
    8th Sep, 2007
    Posts:
    1,448
    Location:
    Sydney, NSW
    Hi Angella,

    That sounds like terrible service :(
    I'm sure a few members can suggest an accountant who actually will help you (and respond to your emails!)

    Cheers,

    Dan