Could this cause an ato issue?

I have a split investment home loan, with a non deductable portion being around $35k.

I have been reading some strategies about borrowing to invest and debt recycling. And thought I could get a Loc, used for only IP expenses and put the equal dollar amount into the personal $35k split.

Could the ato possibly see this as avoiding tax as I do have the money to pay but I am choosing to borrow with the intention of lowering my tax bill.

 

You are borrowing to invest in income producing assets? Interest would generally be deductible.
Nothng wrong with paying down personal expenses while borrowing to invest.

 

Part IVA could apply to a scheme that creates a deductible debt (LOC for IP) while specifically allowing reduction in non-deductible debt for a offsetting sum.

Only certainty is if a binding private ruling that describes all the scheme elements is put to the Commr.

Scheme Elements
1. You apply for a new finance LOC facility of $35K
2. You use the LOC instead of other funds (presently your manner of paying IP costs) to pay IP expenses (only)
3. You use the proceeds generated from surplus cash to made additional repayments of the existing non-deductible debt but not the LOC
4. Your plan and intention si that after a period of time you have $0 non-ded debt and a $35K deductble loan based on facility in 1. above.