Benefits

Margin lending can offer a range of benefits including:

  • Bigger returns. A margin loan gives you more to invest and you have the potential for bigger returns.
  • Unlock the equity in your existing investments. Raise cash for investment purposes without having to sell your investments
  • Support your retirement goals. Investors may use a margin loan as a means of building their wealth for retirement.
  • Greater diversification of your portfolio Spread your investments across a broader range of assets to build a more diversified portfolio.
  • Margin lending can be tax-effective
    • Interest paid on your loan is generally tax-deductible.
    • Interest can be paid up to 12 months in advance and you may be able to get an additional tax deduction for the prepaid interest in the current financial year (subject to your ability to satisfy the tax prepayment rules).
    • By borrowing against your existing portfolio, you may increase the size of your investment without having to sell your existing portfolio and potentially create a capital gains tax event.
    • Australian shares often generate franked dividends, which yield imputation credits that may be used to offset other tax liabilities.

The Detail

TAX LAWS ARE COMPLEX AND MAY CHANGE OVER TIME, POSSIBLY WITH RETROSPECTIVE APPLICATION. YOU SHOULD CONSULT A TAX SPECIALIST OR YOUR FINANCIAL ADVISER REGARDING THE TAX CONSEQUENCES OF INVESTING IN A MARGIN LOAN