Notional refinance between materially identical products across two banks - precendents?

Situation:
Two properties: Inve St (investment, $60K of LOC debt) and Owen Rd (owner-occ, $100K of LOC debt, ready to reduce to $80K).
Three LOC accounts with materially identical T&Cs across two banks.
LOC debt is mostly securitised "the wrong way around", wish to clean up.

NAB LOC1 $30,000 - purpose Inve St, secured by Inve St
NAB LOC2 $100,000 - purpose Owen Rd, secured by Inve St
CBA LOC3 $30,000 (limit $50,000) - purpose Inve St, secured by OwneRd

Assume all other loans fixed or with no additional limit or redraw, and no serviceability for further credit extension.

Goals:
Refinance/realign line-of-credit facilities across the two banks so that purpose aligns with security on the 2 larger loans (with the view of paying the smallest unaligned-ending 30K loan off over the next year).
Use savings to reduce non-deductible Owen Rd debt by $20,000 (ideal) or $30,000 (less ideal).

Desired end state:
NAB LOC1 $20,000 or $30,000 holding a smaller portion of Owen Rd debt
NAB LOC2 $60,000 (limit $100K) holding all Inve St debt
CBA LOC3 $50,000 holding the bulk of Owen Rd debt (orig. $100,000 - 20K/30K savings - $20,000 refinanced to NAB LOC1)

Questions:
Could I do a notional refinance, documented on a specific date on paper, instead of mucking about with complex transfers?
Variant A below probably needs a PBR, but curious if anyone came across any precedents or is confident that a notional deductibility-preserving refinance would be accepted by the ATO? @Terry_w @Paul@PFI


Steps variant A (philosophical ideal - notional refinance):
0) On 1.7.2019 note that total Inve St debt in these products is $60,000. Note that total Owen Rd debt is $100,000. Cash ready to partially pay down Owen Rd debt is $20,000.
1) On 1.7.2019 transfer-refinance $20,000 of NAB LOC2 Owen St debt to CBA LOC3. NAB LOC2 balance becomes $80,000, and later on the same day CBA LOC3 balance becomes mixed $50,000 ($30K Inve St and $20K Owen St).
2) On 1.7.2019 transfer $20,000 cash to NAB LOC2, reducing its (at that stage Owen St) balance to $60,000.
2A) On 1.7.2019 declare and document a notional transfer/refinance/swap of a $30K Inve St portion of CBA LOC3 plus full $30K of Inve St debt from NAB LOC1 - both to NAB LOC2. Pronounce NAB LOC2 now holding $60,000 of Inve St debt. Pronounce NAB LOC1 to now hold $30,000 (formerly Owen Rd portion from CBA LOC3). Pronounce CBA LOC3 to hold $50,000 of Owen Rd debt.


Steps variant B (traceable re-shuffle/re-mix - tedious and have to pay down extra $10K to achieve TR 2000/2 compatibility):
0) Split NAB LOC2 to 50K LOC2a and 50K LOC2b.
1) Transfer $30,000 cash savings into NAB LOC2a (Owen Rd purpose) to reduce LOC2a balance to $20,000
2) Transfer-refinance $30,000 of Inve St debt from NAB LOC1 to NAB LOC2a.
-- At this point NAB LOC1 is empty and NAB LOC2a is mixed purpose ($20K Owen Rd, $30K Inve St). NAB LOC2b still has 50K Owen Rd debt. CBA LOC3 contains $30K of Inve St debt and 20K limit available.
3) Transfer-refinance $30,000 of Inve St debt from CBA LOC3 to NAB LOC1. (CBA LOC3 is now empty with 50K limit available, LOC1 is at limit and holding Inve St.)
4) Transfer-refinance $50,000 of Owen St debt from NAB LOC2b to CBA LOC3. (NAB LOC2b is now empty and ready to accept Inve St debt, LOC2a is still mixed purpose 20K OwneRd/30K InveSt)
-- At this stage LOC3 is complete and holding 50K of Owen Rd debt. Time to move Inve St debt from LOC1 to the empty LOC2b and clean up the mixed LOC2a.
5) Transfer-refinance $30,000 of Inve St debt from NAB LOC1 to LOC2b. (LOC1 is now empty, ready to accept the remainder 20K Owen Rd debt from LOC2a.)
6) Transfer-refinance $20,000 of Owen St debt from mixed-purpose NAB LOC2a to NAB LOC1. (LOC1 is now complete, holding $20K of Owen St debt. LOC2a continues holding 30K of Inve St debt, supported by precedent PBR from Can a loan be unmixed through a two step split? )
-- At this point NAB LOC1 is complete and holding 20K of Owen Rd debt, NAB LOC2a holds $30K of Inve St debt (complete), NAB LOC2b too holds $30K of Inve St debt (complete), CBA LOC3 holds 50K of Owen Rd debt (complete).
Note all steps above in accordance with TR 2000/2 Second Exception - the specific purpose debt was always wholly refinanced from the source account ("no leftovers").

 

I refuse to read your post!

Notional refinances are not refinances.

 

War and peace season 2 ?

 

Ok here's the TL;DR simplified version

LOC1 50K with NAB deductible
LOC2 50K with CBA non-deductible
Same terms.

When a "parking debt facility" is not available to temporarily detour/refi one of the debts to a 3rd account... Due to everything but purpose being identical, can a taxpayer formally/notionally refinance-swap the two purposes without any monies actually moving? Any precedents?

 

no