Hi All, I am looking at setting up an LOC on our PPOR, with the aim to invest some of the money in a managed fund. Obviously I want to be able to claim the interest payments on the LOC as a tax deduction, and also be able to distribute the income from the fund in the most efficient way. We currently have two trusts: 1. A discretionary trust which holds one IP and some units in a managed fund. Overall the trust is slightly CF+, which we distribute to my wife at the end of the year as she is currently not working. 2. A HDT which holds one negatively geared IP. I have purchased all the units in the trust, and so am claiming the interest on the loan as a tax deduction (and receive all the income). Assuming the new investment in the managed funds using the LOC is CF+, which entity would be the best to hold the units? If I gift the money to the discretionary trust can I claim the interest as a tax deduction? Or should I purchase more units in our HDT and let it purchase the units in the managed fund. My idea has been that we would use the discretionary trust for CF+ investments, as we can distribute the profits to my wife, and the HDT for CF- investments, to enable me to claim the tax deductions. Does that make sense? If so, how can I use the discretionary trust to buy units in the managed funds and still claim the LOC interest as a tax deduction? Thanks. John.