Trading money/acct question

If you take money out of your PPOR offset account, you will pay more interest and you do not get a tax deduction for any of it, even if you use the money from your offset to invest in shares.

If you borrow using a margin loan to invest in shares, the interest on the margin loan is tax deductible.

Assuming you are on a 40% tax bracket, you would need to be paying 40% more interest on your margin loan than your home loan to make it more tax effective to withdraw money from your offset account to invest than to use a margin loan (since you would get 0 deduction for the offset account and 40% deduction for the margin loan).

That's not the only factor though - a margin loan increases risk because if the shares drop in value too much, the lender may force you either cough up more cash or sell some of your shares when the market is low. Make sure you understand the implications of margin lending.

An alternative is to see if your lender will split your home loan into two facilities - the main part of your loan + a smaller LOC. If you start with zero balance in your LOC (because you had enough equity in your home already), then if you only borrow money from the LOC for investment purposes, then the LOC interest should be deductible. You can continue paying spare cash into your offset account to minimise your home loan interest without affecting the deductibility of the LOC interest (provided that you never ever ever take money from the LOC and use it for personal expenses).

The benefit of a LOC is that interest rates are generally cheaper and there are no margin calls. The downside is that you aren't necessarily making the most of your available capital - but more capital you invest, the more risks you take and the more you put your home at risk, so being conservative with borrowing from a LOC is a good approach.

There may be costs in setting up a LOC (or maybe not - depends on the bank and your situation), and they are more difficult to refinance.

Margin loans are easy - you usually don't have to prove income or anything if only borrowing a small amount (there a minimum loan sizes - usually $20K or $50K), they are dead-easy to refinance, but they cost more, and there are more risks from margin calls.