D13 Deduction for project pool 2025

Things you need to know

You may be able to claim a deduction at this question for capital expenditure you allocate to a project pool for a project you:

• operate in 2024–25 for a taxable purpose
• carry on, or propose to carry on, for a taxable purpose which is abandoned, sold or otherwise disposed of in 2024–25, before or after it starts to operate.

If you don't have capital expenditure that directly connects to a project, go to question D14 Forestry managed investment scheme deduction 2025.

You can't claim a deduction at this question for:

• private or domestic expenditure, such as the cost of constructing a driveway at your home
• capital expenditure that directly connects with a project you undertake in carrying on a business.

A depreciating asset is an asset that has a limited effective life and can reasonably be expected to decline in value over the time you use it.

A taxable purpose is one of the following:

• producing assessable income
• exploration or prospecting
• mining site rehabilitation
• environmental protection activities.

Certain capital expenditure you incur after 30 June 2001, which directly connects with a project that you carry on (or propose to carry on) for a taxable purpose, you can allocate to a project pool and write-off over the 'project life'. The expenditure must not otherwise be deductible or form part of the cost of a depreciating asset you hold or held.

Such capital expenditure, the 'project amount', is expenditure you incur:

• to create or upgrade community infrastructure for a community associated with the project – this expenditure you must pay, not just incur, to be a project amount
• for site preparation for depreciating assets (other than in draining swamp or low-lying land or for clearing land for horticultural plants)
• for feasibility studies or environmental assessments for the project
• to obtain information associated with the project
• in seeking to obtain a right to intellectual property
• for ornamental trees or shrubs.

You allocate these project amounts to a 'project pool', each project has a separate project pool. If you're unsure whether the capital expenditure you incur qualifies as a project amount, see Guide to depreciating assets 2025.

You spread your deduction for project amounts you allocate to a project pool over the project life:

• The project life is the period from when the project starts to operate until when it stops operating.
• The project life isn't determined by how long you intend to carry on the project. Factors outside your control (for example, something inherent in the project such as a legislative or environmental restriction that limits the project's operating period) are relevant to estimating the project life.
• If there is no finite project life, there is no project and therefore no deduction is available under these rules.

You start to deduct amounts for a project pool in the income year when the project starts to operate. So, if you start to operate a project for a taxable purpose in 2024–25, a deduction is available for 2024–25.

If your project operates in 2024–25 for purposes other than taxable purposes, you must reduce the deduction amount by a reasonable amount for the extent to which the project operates for other than taxable purposes.

Some amounts are assessable income that you must show at question 24 Other income 2025. This includes if, in 2024–25, you either:

• recoup an amount of expenditure you allocate to the project pool
• derive a capital amount in relation to a project amount or something on which you expend a project amount.

Completing your supplementary tax return

To complete this question, follow the steps.

Step 1

Did you conduct transactions in a foreign currency for your project in 2024–25?

• No – Go to Step 2.
• Yes – See Foreign exchange rules, then go to Step 2.

Step 2

Did you abandon, sell or otherwise dispose of your project in 2024–25?

• No – Go to Step 3.
• Yes – If your abandon, sell or otherwise dispose of your project in 2024–25 (whether or not the project started to operate), you can claim both:
  • a deduction for the 2023–24 closing pool value (if any)
  • any project amounts you allocate to the pool in 2024–25.

You must reduce the deduction to the extent the project operates for a non-taxable purpose during 2024–25. Any amount you receive for the abandonment, sale or other disposal is assessable income you must show at question 24 Other income 2025. Go to Step 4.

Step 3

Use the following project pool worksheet to calculate your deduction.

• Work out the deduction on the value of the project pool at 30 June 2025.
  This is the closing pool value for 2023–24 (if any) plus the sum of any project amounts allocated to the pool in 2024–25.
• You must estimate the project life in years, including fractions of years.
• The deduction rate at row d in the worksheet could be 200% or 150%.
  • Your deduction rate is 200% where your project pool contains only project amounts you incur on or after 10 May 2006, and the project starts to operate on or after that date.
  • Your deduction rate is 150% where your project starts operating before 10 May 2006, or where your project starts to operate on or after 10 May 2006 but the project pool contains project amounts you incur before that date.

You can't use the higher rate if you abandon, sell or otherwise dispose of a project you began before 10 May 2006 and then start operating it again, just so that you can work out deductions at the higher rate.

Worksheet: Project pool deduction

Row	Calculation	Amount
a	Value of project pool at 30 June 2025	$
b	Estimated project life	(in years)
c	Divide row a by row b.	$
d	Deduction rate	%
e	Multiply row c by row d.	$
f	Subtract row e from row a.	$

Your closing pool value is as follows:

• If row f is zero or more, your deduction amount for 2024–25 is the amount at row e and the closing pool value for 2024–25 is the amount at row f.
• If row f is less than zero, your deduction amount for 2024–25 is the amount at row a (because your deduction amount can't be greater than the value of the project pool) and the closing pool value for 2024–25 is zero.
• If your project operates for purposes other than taxable purposes in 2024–25, your deduction amount for 2024–25 isn't the full amount at row e or row a (as applicable). Instead, your deduction amount is the amount at row e or row a as applicable, after you reduce it by a reasonable amount for the extent to which the project operates in 2024–25 for purposes other than taxable purposes.

You'll need the closing pool value for 2024–25 to work out your deduction for project amounts for 2025–26.

Step 4

Write your project pool deduction amount at question D13 – label D in your supplementary tax return.

Foreign exchange rules

The pool value can be subject to adjustments. An adjustment could happen under foreign exchange (forex) rules that apply to transactions you conduct in a foreign currency.

If during 2024–25, you meet or no longer have an obligation to pay in a foreign currency a project amount which you allocate to a project pool, you might derive a gain or incur a loss under the forex rules. If the amount in foreign currency becomes due for payment within 12 months after the time you incur it, usually there is a reduction in the pool value by any such gain (a forex gain) and it will increase by any such loss (a forex loss).

If the forex gain exceeds the pool value, the pool value reduces to zero and the residual gain is assessable income which you should include at question 24. If you have previously elected that this treatment ('the 12-month rule') shouldn't apply, any gain will be assessable and you should include it at question 24 and any loss will be deductible and you include it at question D15.

Where to go next

• Go to question D14 Forestry managed investment scheme deduction 2025.
• Return to main menu Individual supplementary tax return instructions 2025.
• Go back to question D12 Personal superannuation contributions 2025.