Consolidating Split Loans - Do I maintain tax deductibility?

Okay so I have been lurking on here for a while and can't seem to find a conclusive answer. Even TR 2000/2 doesn't give me a clear answer on this. I have also requested an early engagement with the ATO just to see if they give me a clearer picture on this but thought I would put this post up to see if anyone else has any insight into it.

Let's say I have 3 Splits on my PPOR home loan.
Split 1 - 200k - Not Tax Deductible Interest
Split 2 - 20k - Tax Deductible Interest
Split 3 - 20k - Tax Deductible Interest

My bank allows me to consolidate splits, if I were to consolidate Split 2 and 3 into a 40k split, do I maintain the tax deductible interest, or does the ATO say that you can't say where the consolidated money came from and it becomes mixed?

Thanks in advance.

 

There would be no problem with consolidating 2 + 3 since both are non-deductible. ideally a offset against that loan. Dont consolidate split 1 with other purposes as that then blends that loan.

Always retain records of old loans and new refinanced loans as the ATO expect to see the trail for any loan where deductions are claimed. They will want to go back to day #1

 

Yes, that is just a refinance and doesn't change deductibility of interest. But there could be other consequences such as if the loans were used by different entities

 

Just being used for debt recycling purposed. But i can only have a maximum of 4 splits so eventually would need to consolidate and then create a new split to pay off, redraw, and invest with.

I should have been clearer that split 2 and 3 are basically redrawn (99.9%) and purchased income producing shares.

The idea was consolidate the split, and then create a new split off of the PPOR balance for another 20k.

 

So 2 & 3 arent non-deductible. But if used for same purpose it may be practical to consolidate. Unwise to consolidate with #1 as its a different purpose and use of funds.

Definately retain evidenc of the old loan for the refinance as the ATO may later seek info on how 2 & 3 were used to acquires shares.

 

Thanks for the replies. Definitely big on record keeping for anything tax related

 

hope you are not debt recycling without tax advice.

 

I won't be getting into debt recycling until I speak with an accountant about it but I like to have an understanding of it all anyway. I think the first reply didn't read my original post but has realised what I meant.

 

Trying to find an accountant that can provide advice in my area - I guess I don't need the person to be in my area though.

 

to be clear, Assuming that the 2 splits do relate to investments are are deductible interest, I see no reason why the combining of these splits would not remain deductible.

 

Yep that's what I got from the thread thanks.