• 16 Deductions relating to Australian investment income

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Show at P the expenses incurred in earning interest and dividends.

    If the trust was paid a dividend by a LIC and the dividend included a LIC capital gain amount, the trust can claim a deduction of 50% of the LIC capital gain amount. The listed investment company's dividend advice statement shows the LIC capital gain amount.

    Expenses listed here that are costs associated with borrowing and servicing debt may not be allowable deductions under the thin capitalisation rules. For more information, see appendix 3. The disallowed amount reduces the amount that would otherwise go at P.

    Deductions for the decline in value of depreciating assets used to earn interest and dividends are generally shown at P. However, if the trust has allocated some of these assets to a low-value pool, you may need to show deductions at Q. For more information, see appendix 6.

    Former STS taxpayers still using the STS accounting method

    If the trust is eligible and has chosen to continue using the STS accounting method, it can claim general deductions (for example, interest expense) only when they are paid. For more information on the STS accounting method see appendix 14.

    Last modified: 13 Aug 2014QC 22968