Debt Recycling for Accountants and Advisers

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What We Do

Debt Recycling Loans is powered by Kingfisher Finance Group, a mortgage brokerage in Coorparoo, Brisbane. We work with clients across Australia by phone and video.

Our client guide explains how debt recycling works. For accountants, registered tax agents and licensed financial advisers, our role is narrower. We look after the lending:

• Arranging the loan, from comparing more than 40 lenders to managing the application or variation
• Structuring separate home and investment splits, each with its own account number
• Coordinating settlement and confirming what each account is for before the first draw
• Keeping the loan documents clean, so each investment draw can be traced from split to asset

Each structure follows the plan you and your client have agreed, as set out in how we structure the loan.

Mortgage brokers must act in the client's best interests when giving credit assistance. The Australian Securities and Investments Commission (ASIC) explains this duty in Regulatory Guide 273 (RG 273).

What Stays With You

We don't recommend investments and we don't give tax advice. Those decisions belong with the professionals licensed or registered to make them.

Under RG 273, a broker can base credit assistance on advice the client has received from a registered tax agent or financial adviser. When we do, we tell the client we are relying on that advice, not endorsing it.

Moneysmart notes that borrowing to invest magnifies losses as well as gains, and that a home used as security can be lost if repayments can't be met. That is why the advice needs to be settled before the loan is.

When to Refer a Client

How a Referral Works

Your client relationship stays with you. We deal with the lending and keep you informed at each of these points.

What We Need From You

The lending follows the plan, so the more settled the plan, the cleaner the structure. Where you have advised on these, they help most:

• Strategy amount: the total to invest, and the size of each tranche
• Timing: when the first draw is needed, and how later rounds are expected to run
• Ownership: whose name the investments will be held in, and whether an entity is involved
• Repayment type: interest-only or principal and interest on the investment split, if you have a view
• History: anything we should know, such as past redraws used for private spending

Ownership shapes who borrows on each split. For couples, our guide on whose name the investments go in covers the lending side.

Records at Tax Time

The Australian Taxation Office (ATO) looks at what borrowed money is used for, not the asset securing it. Interest on money borrowed to buy shares is generally deductible where it is reasonable to expect assessable dividends, and a loan also used for private purposes must be apportioned.

With the client's permission, we can provide:

• Statements for each split, showing balances, interest charged and draws
• Redraw records showing the date, amount and destination of each investment draw
• Settlement documents confirming each split's account number and limit
• Confirmation of later changes, such as a new split or a switch in repayment type

Our guide to record-keeping for debt recycling lists what clients should keep over the life of the strategy.

How We Work Together

Debt recycling holds up when the lending, tax and investment advice line up before the first dollar moves. You are welcome to call us about a structure or a lender question before a client is referred.

Clients who want to see the process from their side can read what working with Alex involves.

Kingfisher Finance Group Pty Ltd ATF The Gee Unit Trust is an Authorised Credit Representative (522680) under Australian Credit Licence 387025, held by Mortgage Specialists Pty Ltd t/as Specialist Finance Group.

The Bottom Line

We arrange and structure the lending, coordinate settlement and keep the loan records clean for tracing. Investment advice stays with the financial adviser, and tax advice with the accountant or tax agent.

Referrals start with the client's consent, and we call the client within one business day.

Frequently Asked Questions (FAQs)