Can I claim a deduction for the interest I would have saved having money in an offset account that I have instead used to purchase shares?
Eg 10k in offset would have saved $500 in interest in a year but it has been used to purchase shares instead.
Cheers
No - taking money out of an offset account is not borrowing.
No. Further to what has already been stated.
There is an ATO interpretive decision that covers this issue. The decision relates offset account funds used to purchase of a rental property as opposed to shares however the same principles apply.
Depositing funds into the deposit account will decrease the interest payable on the loan account but will not decrease the balance of the loan account.
Withdrawing funds from the deposit account will increase the interest payable on the loan account but will not increase the balance of the loan account.
In your case, as you have an offset account as well as your loan account, the loan account will operate in conjunction with a deposit account. Any credit balance of your deposit account will reduce the interest payable on your loan account.
Consequently when you withdrew funds for the deposit from your offset account, the interest payable on your loan increased. The fact that the funds were used for the deposit for your rental property does not convert the interest payable on your original home loan into a deductible expense.
In withdrawing money from your offset account, you have not actually incurred any interest expense.
https://www.ato.gov.au/law/view/print?DocID=EV%2F1012753085215&PiT=99991231235958
15 Apr 2026 · 4 min read time
15 Apr 2026 · 8 min read time
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