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  • Interest, dividend and other investment income deductions

    You can claim a deduction for expenses you incur in earning interest, dividend or other investment income.

    You can't claim a deduction if you receive an exempt dividend or other exempt income.

    If you attend an investment seminar in relation to an existing investment, you may be entitled to claim a deduction for the portion of expenses that relate to investment income activities.

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    Interest income expenses

    You can claim a deduction for account-keeping fees you incur on an account held for investment purposes. For example, a cash management account. You will find these fees listed on your statements.

    If you have a joint account, you can only claim your share of fees, charges or taxes on the account. For example, if you hold an equal share in an account with your spouse, you can only claim half of any allowable account-keeping fees you pay on that account.

    You can't claim a deduction for interest you incur on a personal tax debt. For example, interest on a loan you take to pay your personal tax debt.

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    Dividend and share income expenses

    You can claim a deduction for interest charged on money borrowed to buy shares and other related investments that you derive assessable interest or dividend income from.

    Only interest expenses incurred for an income-producing purpose are deductible.

    If you use the money you borrow for both private and income-producing purposes, you must apportion the interest between each purpose.

    What you can claim

    You can claim a deduction for costs you incur to invest in shares, such as:

    • ongoing management fees or retainers
    • amounts you pay for advice relating to changes in the mix of investment
    • a portion of other costs you incur in managing the investments, such as:  
      • some travel expenses
      • the cost of specialist investment journals and subscriptions
      • borrowing costs
      • the cost of internet access
      • the decline in value of your computer.
       
    • 50% of the Listed investment company (LIC) capital gain amount – if you were an Australian resident when a listed investment company paid you a dividend, and the dividend included a LIC capital gain amount.

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    What you can't claim

    When you invest in shares, you can't claim:

    • fees you incur for drawing up an investment plan, unless you were carrying on an investment business
    • some interest expenses where you borrow money under a capital protected borrowing arrangement to buy shares, units in unit trusts and stapled securities.
      The interest is treated as the cost of the capital protection feature.

    Rental and holiday home deductions

    You can claim a deduction for interest and borrowing expenses that relate to your rental property for the period your property is rented or is genuinely available for rent.

    You can only claim a deduction for the portion of any expenses that relate to the income-producing use.

    You can't claim any deductions for the cost of travel you incur relating to your residential rental property unless you are either:

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    Forestry managed investment scheme deduction

    If you make payments to a forestry managed investment scheme (FMIS), you may be able to claim a deduction for these payments if you:

    • currently hold a forestry interest in an FMIS, or held a forestry interest in an FMIS during the income year, and
    • have paid an amount to a forestry manager of an FMIS under a formal agreement.

    You can only claim a deduction if the forestry manager has advised you that the FMIS satisfies the 70% direct forestry expenditure rule in Division 394 of the Income Tax Assessment Act 1997.

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    Last modified: 18 Jun 2021QC 31945