The end of financial year (EOFY) is when a year of debt recycling becomes a tax return. A short checklist before and after 30 June keeps the deduction clean and the paperwork simple.
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Most EOFY work for debt recycling happens after 30 June, when statements arrive. A few decisions have to be made before then, so start in early June.
The deduction rests on what each borrowed dollar was used for, the principle behind how debt recycling works. Each item below helps prove that use.
The Australian Taxation Office (ATO) lets individuals claim prepaid investment interest in the year it is paid if two conditions are met. The period covered must be 12 months or less, and it must end by the last day of the next income year.
If either condition is not met, the deduction is spread over the period the payment covers. Not every lender or loan type allows interest to be prepaid, so check before you plan around it.
Prepaying moves a deduction forward. It also takes cash out of your offset or buffer, so it is a timing decision for your accountant, not a default step.
After 30 June, get an interest statement for every split. Each one should show its own account number, balance and interest charged for the year.
| Record | Why It Matters |
|---|---|
| Investment split interest statements | Show the interest you may be able to claim |
| Home split statement | Shows the home debt is separate, and that income and refunds were paid onto it |
| Redraw and transfer records | Link each drawdown to the investment it bought |
| Prepaid interest receipt | Supports the timing of that deduction |
Separate account numbers for each purpose make this step quick. They are a core part of how we structure the loan.
If any part of an investment split was used for something private, the ATO requires the interest to be apportioned between the investment and private portions. Repayments must also be apportioned across both portions, so you cannot choose to repay only the private part.
One private redraw can therefore affect every later year of that split. Our guide to the redraw contamination trap explains how it happens and how to avoid it.
If you find a private redraw, tell your accountant rather than leaving it out. They work out the deductible share.
Your accountant also needs the income your investments produced and any purchases or sales.
The ATO generally requires investment records to be kept for five years after your return is processed. Records of what you paid for an asset are kept until five years after you sell it.
One tidy bundle saves time and reduces the chance of an error. Send:
Our record-keeping guide for debt recycling sets out a simple system that keeps this bundle quick to assemble.
If you lodge your own return, it is due by 31 October. A registered tax agent can generally lodge later, provided you engage them before 31 October.
The refund is part of what keeps debt recycling moving. Paid onto your home loan, it reduces the debt you cannot claim.
If you plan to recycle it, pay it onto the split set up for that purpose and redraw it from there to invest, so the trail stays clean. Your financial adviser guides the investment decision, and Kingfisher arranges the lending without giving tax advice.
If this year showed your lender cannot keep splits separate or pay redraws to an investment account, refinancing for debt recycling may be worth reviewing before the next cycle.
The year ending 30 June 2027 is also the last before new capital gains tax (CGT) rules start. From 1 July 2027, the 50% CGT discount for individuals, trusts and partnerships is replaced with inflation indexation and a 30% minimum tax. Gains that accrued before that date keep the 50% discount.
The Budget explainer says an asset's value at 1 July 2027 can be set by a valuation or an ATO formula. Ask your accountant whether you need a record of your investments' values at that date.
A debt recycling EOFY routine is mostly about proof. Settle any prepaid interest question before 30 June, collect a statement for every split, flag any private use, and give your accountant one tidy bundle. Then put the refund back to work on the home loan.
We can review your loan so each split has one purpose and its own statement before next year.
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Written and updated byAlex GeeDirector & Mortgage Broker, Kingfisher Finance Group
Reviewed byJessica MaraisMortgage & Finance Broker, Kingfisher Finance GroupIn early June. Decisions such as prepaying interest need to be made before 30 June, and the statements and income records follow after the year ends.
Possibly. The ATO allows a deduction in the year paid for prepaid interest covering 12 months or less that ends by the end of the next income year, but not every lender or loan allows it.
Tell your accountant. The ATO requires the interest to be apportioned between the investment and private portions of the loan.
It makes the job much simpler. A statement per split shows the interest on each purpose and makes the deductible amount clear.
The ATO generally requires five years after your return is processed. Keep purchase records until five years after you sell the investment.
By 31 October if you lodge it yourself. If you use a registered tax agent, engage them before 31 October and they can generally lodge later.
Paying it onto your home loan reduces non-deductible debt. If investing it is part of your plan, it can then be redrawn through the split set up for that purpose.
Learn when investment-loan interest may be deductible under ATO principles, including the purpose test, tracing and common setup errors.
Read more → GUIDELearn seven structural debt recycling mistakes that may put interest deductions at risk, including mixed splits, redraw and parked funds.
Read more → GUIDELearn how debt recycling loan splits work, how many may be needed and why clean sub-accounts matter for tracing investment interest.
Read more →
1. Arranged a loan when our small business situation made it difficult to qualify.
2. Met requirements to have funding available by a specified date.
3. Understood my needs to setup debt recycling to allow tax structuring.
4. Communicated well throughout.
I would use their services again.
Alex, Jess and the Kingfisher team were second to none and their process from start to finish was faultless. As a self-employed business owner, it can be difficult to obtain finance at the best of times. The Kingfisher team made this an easy and efficient proposition and their continued transparent and efficient communication ensured we were kept up to date at all times. Highly recommend them for your finance needs!
Alex and Jess dealt with our investment loan and provided a top tier service. They kept us up to date and communicated every step of the process making it a seamless and smooth experience! Awesome work team we will definitely be back for future loans!
Jess from Kingfisher was outstanding. I couldn't fault her communication, expertise or dedication to finding the best loan for our situation. The entire process was seamless from start to finish. We'll definitely be using Kingfisher again in the future. A top-tier organisation.
