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No LOC, investment loan has an upper limit of $100k over the drawn amount. Would the situation be different if the taxpayer directed their rental income to his non deductible debt and the investment interest compounded? 2. Same as 1 but taxpayer does not have a non deductible loan and simply chooses to spend the rent on lifestyle. What gives the ATO the power to direct taxable income (rent) toward a loan payment if the taxpayer chooses to spend it instead? How would this affect the deductibility of the loan? 3. If the rent is directed toward the private expenditure due to financial difficulty and the interest on the investment loan is compounding the dominant purpose is not to obtain a tax benefit. 4. If I had a business I may choose to meet the interest payments on an investment loan from my overdraft whilst banking the cash in an interest bearing account. This could potentially affect thousands of business. 5. In many cases taxpayers want to pay off their private home as quickly as possible. The investment property is not as important as little or no emotion is involved. As is the case with many investment properties the rent is not sufficient to cover the interest payments. How will the ATO view a situation where the rent is $1,000 and the interest is $1,500 per month? The shortfall of $500 is paid from a LOC. The taxpayer simply cannot afford to make up the shortfall.