The Australian Taxation Office (ATO) have issued a draft ruling SMSFR 2001/D1 indicating that money borrowed to acquire a property may also be used to carry out repairs and maintenance to the asset either at the time of acquiring the property or at a later time.

However borrowings can not be used to fund the improvement of the property (i.e. adding a second storey or a new pool to the existing dwelling).

Please note that this is a DRAFT ruling only and once finalised is expected to take effect for arrangements entered into from 7 July 2010.