From the information out there on the interwebs, I am aware that ASX listed shares which pay dependable dividends are able to be lent against and negatively geared. Stocks such as TLS, NAB, ANZ, and WES etc.
But what Im really interested in knowing is that, if I was to start contributing to an off-market managed fund through a loan, what type of distributions are deemed to be acceptable to allow for negative gearing ?
Micro Cap funds (Greencape, Novaport, OC Micro Cap etc) would to a large extent distribute capital gains (due to the size of the companies targeted), which I'm guessing is not deemed to be income as these payments are not regular and reliable in nature.
But what happens with funds who hold companies in the ASX200 (Bennelong, Vanguard, Fidelity, Investors Mutual etc) and make a distribution to unit holders which is a combination of both capital gains and dividends? What is the acceptable mix of capital gains and dividends that would be classed as "income" and allow for negative gearing ?
I did consult an accountant a few weeks back, but didnt receive a satisfactory reply other than that I need to deduct interest incurred against "income". When asked what is "income" I didnt get a very straightforward answer. Hopefully someone knows this answer or can point me to some helpful resources on the net.
