INSIGHTS

Debt, when used wisely, becomes more than just a funding source. It becomes a strategic tool. Borrow to grow your business or acquire income-producing assets, and the interest you pay may reduce your tax bill - turning what’s often seen as a cost into a financial advantage.

Purpose Matters More Than You Think

In tax, why you borrow is everything.

If you borrow for personal reasons - to fund a holiday, buy a boat, or consolidate consumer debt - your interest bill is just that: a cost. No deduction. No benefit. Just money out the door.

But borrow for the right reasons - to acquire an investment, fund working capital, purchase trading stock, or refinance business debt - and the interest cost may be deductible, provided it meets ATO requirements, which could reduce your overall tax payable.

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Let’s Put Numbers to the Theory

Keeping it simple with the numbers, let's consider a family trust that draws a $1 million loan from Rampart at a hypothetical rate of 10% to purchase a thriving private business.

Because the loan’s purpose is to generate dividend income and capital growth, the full $100,000 interest is likely deductible in the trust (subject to tax law and compliance).

If the trust’s profit flows to a beneficiary taxed at the top marginal rate of 47%, the deduction saves $47,000 in tax. The after-tax interest cost falls to $53,000. The effective rate isn’t 10% -  it’s 5.3%.

(Assumes the entire interest is deductible in the same year and all ATO requirements are met.)

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Looking at the Whole Balance Sheet

Rampart looks at the whole balance sheet - private businesses, unlisted shareholdings, property, digital assets etc. By seeing every piece of your wealth, we can structure loans that unlock capital without forcing the sale of prized assets or adding complexity.

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Efficient Capital in Action

When interest is deductible, every dollar saved in tax is a dollar left to compound. Smart borrowers treat debt as a tool, not a burden. They finance growth, not lifestyle, and they do it with lenders that understand complex balance sheets.

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A Final Word

The right loan, for the right purpose, can do more than fund your next move - it can lower your effective interest cost, improve your after-tax return and strengthen your position. That’s the power of structured debt.

At Rampart, we don’t just provide capital. We help you put it to work, strategically. If you're borrowing with a clear investment or commercial objective, we’re here to help you make it count.

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Disclaimer: Rampart Capital does not provide financial, tax, or investment advice. The information in this article is general in nature and for informational purposes only. Individuals should seek independent advice from a qualified tax or financial advisor before making any decisions based on their specific circumstances.