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Business related costs – section 40-880 deductions

Last updated 10 December 2019

Certain business related costs incurred after 30 June 2001 are now deductible to the extent that the business is or was carried on for a taxable purpose. The costs must not be otherwise deductible or form part of the cost of a depreciating asset or of land. The following types of business related expenditure may now qualify for deduction:

  • business establishment costs
  • business restructuring costs
  • business equity raising costs
  • costs of defending your business against a takeover
  • costs to the business of unsuccessfully attempting a takeover
  • costs of liquidating a company that carried on a business and of which you are a shareholder
  • costs of ceasing to carry on the business.

If the expenditure arises from a non-arm's length dealing and is more than the market value of what it was for, the amount of the expenditure is taken to be that market value.

You deduct 20 per cent of the expenditure in the year you incur it and in each of the following 4 years.

Any recoupment of the expenditure is included in your assessable income.