• Deductions

    16 Deductions relating to Australian investment income

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

    If the partnership was paid a dividend by a LIC and the dividend included a LIC capital gain amount which is shown on the LIC’s dividend statement, the partnership can claim a deduction of half of 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 partnership has allocated some of these assets to a low-value pool, you may need to show deductions at Q item 18, for more information, see Appendix 6.

    If you have incurred interest in respect of a collapsed MIS, then for information on your eligibility to claim a deduction for interest expenses see Collapse of agribusiness managed investment schemes: participant information.

    If the TOFA rules apply to the partnership, include all deductions relating to Australian investment income from financial arrangements subject to the TOFA rules at P.

    Former STS taxpayers still using the STS accounting method

    If the partnership 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 continued use of the STS accounting method.

    Last modified: 10 Aug 2016QC 48217