But if you were to refinance and take extra money, your deductions will suddenly increase compared with your last tax return. If you do not have any other income source, new property, share dividends etc in your tax return, the ATO may wonder what you used the money for. They can then send you a questionaire to fill out which may ask questions such as did you refinance any loans, or increase any loans.

With No Docs you should not be stating any income at all. And what is the $6000 for?

Borrowed money is not income so therefore you wouldn't have to pay tax on money borrowed to live on – but you would have to pay interest.

St G have come back saying loans personally guaranteed will need to be declared too.

How could borrowing to buy a car work?

It happens all the time. People borrow to purchase a car which is to be used for business purposes. It is not a loophole, but can be a legitimate expense if your business needs a car.

You cannot claim the interest on money used for personal expenses. But you may be able to pay all expenses of your properties with your LOC, thus reducing your cash used leaving more for your lifestyle. If you do it properly you may be able to pay for any cashflow short fall with the LOC (if negative geared for example) OR you may even decide to borrow to pay the interest on your investment loans.

Other tax consequences: Leaving your CGT bill to the ATO.
Imagine if you purchased a $100,000 property and this grew to $2,000,000 over the next 20 years. If you then took out your loan to 90% of the value = $1,800,000 and used this money to have a great holiday, purchase that hip replacement, kidney transplant etc.
What happens when you die? The property will be sold and the loan paid back with $200,000 remaining, but a capital gain of $1,900,000. Assuming your estate only had this property it would have assets of $200,000 but a capital gain of $850,000. (tax of around $391,000).

1) Yes,
2) The developer could sub divide the land first and then have title, with the construction still to be completed.

Its something I heard about years ago, not sure if things have changed. I can't even remember what the licence is called now, but it would probably be covered by the dept of fair trading over there.

Yes it is possible to claim interest on vacant land with a few conditions. Ask you accountant to look at Steele's case for justification.