Things you need to know
To claim a deduction for interest income expenses, you must incur expenses in earning interest from any source in Australia. This includes accounts and term deposits held with financial institutions.
Expenses you may incur in earning interest income include:
- bank or other financial institution account-keeping fees for accounts held for investment purposes
- management fees and fees for investment advice relating to changes in the mix of your investments
- interest you paid on money you borrowed to purchase investments.
If you incur expenses when borrowing money for both private use and to purchase investments to produce interest, you can claim only the portion of the expenses relating to the investments.
You can also claim a proportion of the decline in value of your computer based on the percentage of your total computer use that relates to managing your investments. If you use your computer to manage both your investments to produce interest and investments in shares or similar securities, you can claim only the proportion of the decline in value relating to managing those investments once, at either question D7 or D8. If you're claiming a deduction for the decline in value on your computer, see Guide to depreciating assets 2025.
If you incur expenses relating to certain overseas investments (or investments in Australia if you're a foreign resident), your claims may be affected by the thin capitalisation rules. These rules may apply if the total of your debt deductions and those of your associates is more than $2 million for 2024–25. For more information, see Thin capitalisation – how the rules work.
What you can't claim as interest income deductions
You can't claim expenses you're charged for drawing up an investment plan unless you're carrying on an investment business, in which case you claim any expenses at P8 Business income and expenses in the Business and professional items schedule 2025.
If this applies to you, then you should lodge your tax return using myTax or a registered tax agent. If you're unable to use myTax or a registered tax agent, contact us and we'll send you a paper tax return that includes the Business and Professional items schedule 2025.
Don't show at this question
Don't show at this question any interest related expenses you incur in:
- earning trust and partnership distributions – show these at question 13 – labels X and Y in your tax return
- earning foreign source interest – show these at question 20 or question D15 in your tax return.
If you don't have any interest related deductions, go to question D8 Dividend deductions 2025.
What you need to answer this question
You'll need your bank or financial institution statements or passbooks.
If you have joint accounts or other interest-earning investments, show only your share of the joint expenses. If you hold the account or investment equally with one other person, this will be half. Keep a record of how you work out your proportion if you and the other investors or account holders don't share the expenses equally.
Completing your tax return
To complete this question, follow the steps.
Step 1
Add up all your deductions for this question.
Step 2
Write the total amount at question D7 – label I.
Where to go next
- Go to question D8 Dividend deductions 2025.
- Return to main menu Individual tax return instructions 2025.
- Go back to question D6 Low-value pool deduction 2025.