I think thats a good explanation Nigel.

In essence it comes down to whether you are are taking the loan to receive a guaranteed right to income and capital gain from the investment.

Investing through a fixed trust will ensure the interest is deductable as you have a fixed entitlement to the income and capital from the trust. This would apply to a unit or hybrid unit trust.

On the flipside if you have a guranteed right to income and capital gain, then this is viewed as an asset, and would therefore be at risk if you are sued for whatever reason.

Cheers,
Kris