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Picture Book · Debt recycling

A redraw is a new loan

Story pages

A woman around fifty with short grey hair hanging washing on a backyard line on a breezy day
Meet Grace. She's 50 and has paid extra off her home loan.
A bucket being lowered into an old stone well
When she redraws money from her loan account, the ATO treats that as a new borrowing.
A fork in a bush walking track
So the tax result depends on what she uses that redraw for, not why she first took out the loan.
A small vegetable patch with neat rows of young seedlings
If she redraws to buy an income-producing investment, the interest on that part can be deductible.
A half-renovated kitchen with a paint tin and a ladder
If she redraws to renovate the kitchen, the interest on that part isn't.
A woman around fifty writing in a notebook at a sunny desk
Grace notes the date, amount and use of every redraw.

The end

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General advice warning. This picture book is general information only. It does not take into account your objectives, financial situation or needs, and it is not personal advice. Rules and thresholds change. Before acting, consider whether it is right for you, read any relevant Product Disclosure Statement and our Financial Services Guide, and seek personal advice. Past performance is not a reliable indicator of future performance.

Information as at 27 October 2026. Sources:

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