myTax2025 Deduction for project pool

Things to know

Complete this section if you had capital expenditure that directly connected with a project.

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

• operated in 2024–25 for a taxable purpose
• carried on, or proposed to carry on, for a taxable purpose which was abandoned, sold or otherwise disposed of in 2024–25, before or after it started to operate.

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

• private or domestic expenditure, such as the cost of constructing a driveway at your home
• capital expenditure that is directly connected with a project you undertook 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 used 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 incurred after 30 June 2001, which was directly connected with a project that you carried on (or proposed to carry on) for a taxable purpose, can be allocated to a project pool and written off over the 'project life'. The expenditure mustn't 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 incurred:

• to create or upgrade community infrastructure for a community associated with the project – you must have paid for this expenditure, not just incurred, to be a project amount
• for site preparation costs for depreciating assets (other than draining swamp or low-lying land, or clearing land or horticultural plants)
• for feasibility studies and 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 incurred qualifies as a project amount, see Guide to depreciating assets.

You spread your deduction for project amounts you allocated 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 started to operate a project for a taxable purpose in 2024–25, a deduction is available 2024–25.

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

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

• recouped an amount of expenditure you allocated to the project pool
• derived a capital amount in relation to a project amount or something on which you expended on a project amount.

Completing this section

To personalise your tax return to show a deduction for project pools, at Personalise return select:

• You had deductions you want to claim
• Other deductions

To show a deduction for project pools, at Prepare return select 'Add/Edit' at the Deductions banner.

At the Deduction for project pool banner:

1. For each project pool, select Add, enter the project pool description and work through the following steps to calculate your project pool deduction amount.
2. Did you conduct transactions in a foreign currency for your project in 2024–25?
   Yes – See Foreign exchange rules. Go to step 3.
   No – Go to step 3.
3. Use the Project pool calculator (XLSX, 151KB)This link will download a file to calculate your project pool deduction.
   When you have calculated your project pool deduction, go to step 4.
4. Enter your 2024–25 project pool deduction into Project pool deduction amount.
5. Select Save.
6. Select Save and continue when you have completed the Deductions section.

If your project was abandoned, sold or otherwise disposed of in 2024–25, then any amount you received for the abandonment, sale or other disposal is assessable income. This must be shown at Other income.

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 conducted in a foreign currency.

If during 2024–25 you met or no longer had an obligation to pay in a foreign currency a project amount which you allocated to a project pool, you might have derived a gain or incurred a loss under forex rules. If the amount in foreign currency became due for payment within 12 months after the time you incurred it, usually there is a reduction in the pool value by any such gain (a forex gain) and it will be increased by any such loss (a forex loss).

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

For more information about the forex rules, see Foreign exchange gains and losses.