PreTax Equivalent Earnings on the PPOR offset Money in your PPOR offset saves you interest. If you earned the same amount of interest elsewhere it would be taxable. So really you are getting a higher return on your deposit than just the interest savings. Working out Post tax return $1000 in the offset of a loan that charges you 4% interest would mean you are saving $40 per year in interest. If your marginal tax rate is 49% then the equivalent pre-tax return would be $78.43. To work this out use the following formula: (Interest Savings) / (1- marginal tax rate). $40 / (1-49%) = Pre-tax earnings $78.43 Back check this: $78.43 x 49% = $38.43. This would be the tax payable on earning $79.43 $78.43 - $38.43 = $40 after tax. Working it out as a percentage, To earn $78.43 from $1,000 invested you would need to earn 7.84% The formula for this is: Earnings / capital = return 78.43/1,000 = 7.84% What all this means, for this particular situation, is that paying money into your offset account on your PPOR loan or paying your loan down will result in you earning a 7.84% return – and is virtually risk-free.