Question: Explain why a tax offset is a much more effective way than tax deductions to reduce an overall tax bill Discuss the following comment The

Explain why a tax offset is a much more effective way than tax deductions to reduce an overall tax bill

Discuss the following comment The source of the funds rather than the use the funds are put to determine whether the interest paid on a loan is tax-deductible. As a result, it is only possible to claim interest deductions on loans from banks as they are in the business of making loans.

Explain why the interest paid on a loan to purchase a vacant block of land is not tax-deductible and must be included in the cost base, whereas interest on a loan to purchase a rental is deductible and cannot be included in the cost base.

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1 Tax Offset vs Tax Deduction A tax offset directly reduces the amount of tax owed dollar for dollar whereas a tax deduction reduces taxable income wh... View full answer

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