Discretionary Trust – Losses transferrable??

I read a post last night dated sometime in late 2003 re discretionary trust losses. (I had a power fluctuation and computer shut down before I could note the dates).
The discussion thread was about Trusts being able to pass only income to the beneficiaries and not losses in case of negative gearing. One of the post stated that – to claim the losses on individual’s tax return, borrow the money for buying IP as individual and not by the trust. However, the property is held under name of the Trust. So when the rental income is distributed to beneficiaries the interest on the loan is deducted from the income and the resultant losses are claimed on individual basis.[eh]

My question is whether this is allowable i.e. is there a direct link between the individual’s interest expense and the income received from the Trust to allow the offset under tax rules?