Debt recycling from sub loan with redraw.

 Author: YellowPotato(Taxicorn)Taxicorn

23 Apr 2026

Does the initial repayment (with the borrowed funds) of the sub loan affect the deductibility of the interest on the redraws moving forward.

• What do you mean affect? That is the necessary step
• The deductibility of the loan is based on the purpose of the loan, not the asset used as the security
• Redraw is considered a new loan and deductibility is based on purpose of the redraw amounts
• Reading ATO ruling TR 2000/2 may help
  • https://www.ato.gov.au/law/view/document?docid=TXR/TR20002/NAT/ATO/00001

Reply0 likes

• Report as inappropriate