The Australian Taxation Office has included two mortgage structures among a group of unacceptable tax schemes in a guide to tax-effective investment published yesterday. It describes them as mortgage management plans and home loan unit trust arrangements.In a mortgage management scheme, the promoter offers a means of creating deductible interest payments, equivalent to home loan interest repayments, using equity in the home to refinance and obtain additional funds for investment.The initial step is to refinance and create two separate loan accounts (both secured over the home). Standard principal and interest payments are made on one loan account. The promoter uses the funds in the second loan account to purchase investment assets and undertakes to pay the interest on behalf of the borrower. The borrower does not derive any income from the investments.The borrower claims a deduction for the interest paid on the second loan account. The ATO's view is that the arrangement does not involve the purchase of a real investment.In a home loan unit trust arrangement, the promoter sets up a unit trust as a vehicle for the client to borrow and buy a property. The borrower lives in the property and pays rent to the unit trust at a market rate, which the trust declares as taxable income.The trust claims associated expenses and interest charges as a deduction against the rental income, and the borrower claims a deduction for the interest payments on the borrowing.The ATO's view is that the borrowing is for a private expense and there is no entitlement to a deduction.ATO warns on mortgage management schemesThe Australian Taxation Office has included two mortgage structures among a group of unacceptable tax schemes in a guide to tax-effective investment published yesterday. It describes them as mortgage management plans and home loan unit trust arrangements.In a mortgage management scheme, the promoter offers a means of creating deductible interest payments, equivalent to home loan interest repayments, using equity in the home to refinance and obtain additional funds for investment.The initial step is to refinance and create two separate loan accounts (both secured over the home). Standard principal and interest payments are made on one loan account. The promoter uses the funds in the second loan account to purchase investment assets and undertakes to pay the interest on behalf of the borrower. The borrower does not derive any income from the investments.The borrower claims a deduction for the interest paid on the second loan account. The ATO's view is that the arrangement does not involve the purchase of a real investment.In a home loan unit trust arrangement, the promoter sets up a unit trust as a vehicle for the client to borrow and buy a property. The borrower lives in the property and pays rent to the unit trust at a market rate, which the trust declares as taxable income.The trust claims associated expenses and interest charges as a deduction against the rental income, and the borrower claims a deduction for the interest payments on the borrowing.The ATO's view is