a) Jane can claim a tax deduction under (s8-1 (1)) the 2 positive limbs that you can deduct from your assessable income any loss or outgoing to the extent that it is necessarily incurred in carrying on a business for the purpose of gaining or producing you assessable income. However, Post-business expenses are not normally deductible (see Amalgamated Zinc (De Bavay’s) Ltd v FCT.
But if she used the proceeds to go on a holiday then it cannot deductible under (s8-1 (2)) the 4 negative limb part (b) that if it is a loss or outgoing of a private or domestic nature. Also it isn’t incurred in gaining or producing assessable income under (S8-1 (1) (a)).
In this case, if Jane refinancing the loan, it won’t change the relationship between interest expense and assessable income, but the lower interest rate will help Jane save money, it can decrease the size of Jane’s monthly payment.
