Expenses P8

Expenses you don't include

Don't include the following expenses on your schedule:

• non-business interest and dividend income expenses; claim deductible expenses at questions D7 and D8 in your tax return
• farm management deposits; include them at question 17 in your supplementary tax return
• non-business rental expenses; claim deductible expenses at question 21 in your supplementary tax return
• expenses and losses relating to foreign source income; take them into account as required at question 20 or, in the case of certain debt deductions, claim them at question D15 in your supplementary tax return
• expenses relating to your PSI shown at P1 Personal services income in your schedule
• low-value pool deduction, where the pool contains assets used for work-related, self-education or non-business rental purposes, see question D6 in Individual tax return instructions 2024.

Your expenses may include expenditure relating to the acquisition and disposal of crypto assets in the ordinary course of your business, or the arm's length value of the business item (including trading stock) acquired using crypto assets.

You need to complete all questions that relate to your business or businesses.

You can't deduct salary and wage expenses where you have not complied with your pay as you go withholding obligations. See Removing tax deductibility of non-compliant payments.

If you are a primary producer, you will need a primary production worksheet to help you work out some of the amounts in this section. This worksheet is included in Information for primary producers 2024. Complete the worksheet before proceeding.

Goods and services tax

If you are registered or required to be registered for GST, exclude from the deductions any input tax credit entitlements that arise in relation to outgoings.

If you pay GST by instalments and incurred a penalty for underestimating a varied GST instalment, you can claim a deduction for the penalty at question D10 in your tax return. Don't show the penalty on your Business and professional items for individuals 2024.

For more information, see Individual tax return instructions 2024.

Records you need to keep

You must keep your business expenses records for 5 years after you prepared or obtained them, or 5 years after you completed the transactions or acts to which they relate.

Prepayments of $1,000 or more

If you made a prepayment of $1,000 or more for something to be done (in whole or in part) after 30 June 2023, the timing of your deduction may be affected by the rules relating to prepayments. You will need to apportion your deduction for prepaid business expenditure over the service period, or 10 years, whichever is less. There is an exception if the 12-month rule applies and you are a small business entity, or you would be a small business entity if the aggregated turnover threshold was less than $50 million.

Where expenses shown at P8 Expenses include prepaid expenses that differ from the amounts allowable as deductions in 2023–24, make an expense reconciliation adjustment at P8 Reconciliation items – label H.

For more information, see Deductions for prepaid expenses 2024

Thin capitalisation rule

The thin capitalisation provisions limit the debt deductions that certain entities (including individuals) can claim for tax purposes based on the tests set out in Division 820 of the ITAA 1997. These rules ensure that taxpayers fund their Australian operations with an appropriate amount of equity.

The thin capitalisation rules may apply to you if:

• you are an Australian resident and you, or any of your associate entities, are an Australian controller of a foreign entity or carry on business at or through an overseas permanent establishment, or
• you are a foreign resident with operations or investments in Australia and you are claiming debt deductions.
• The thin capitalisation rules will not affect you if either:
  • your debt deductions (combined with the debt deductions of your associate entities) don't exceed $2,000,000 in 2023–24, or
  • you are an Australian resident and the combined value of your associates’ and your Australian assets is not less than 90% of the value of your associates’ and your total assets.

If the thin capitalisation rules affect you, the amount of any debt deductions you can claim may be reduced by these rules.

Opening stock

Follow the instructions below to complete this item.

Did you have trading stock on hand at the start of the year?

• No – Go to Purchases and other costs.
• Yes – Read on.

You need to know

The opening value of an item of stock must equal its closing value in the previous year. The total value of all stock on hand at the start of the year is equal to the amount shown as closing stock on your 2023 schedule.

If you are a primary producer, you must add the value of your opening stock from your livestock account at PP4 on your primary production worksheet to the value of your opening stock from your produce account at PP9 on your primary production worksheet. The total of these amounts is the total value of your primary production opening stock.

Don't include any amounts representing opening stock of a business which commenced operations during the year. Include the purchase costs of these items in the relevant Purchases and other costs box.

Completing this question

Step 1 Write the total value of your primary production opening stock at Opening stock in the Primary production column, P8 Expenses in your schedule. Don't show cents.

Step 2 Write the total value of your non-primary production opening stock at Opening stock in the Non-primary production column, P8 Expenses. Don't show cents.

Step 3 Add up your primary production and non-primary production opening stock values and show the total at label K.

Purchases and other costs

Follow the instructions below to complete this label.

Did you have purchases and other costs?

• No – Go to Closing stock.
• Yes – Read on.

You need to know

Purchases and other costs represent the direct cost of materials used for manufacture, sale or exchange in deriving the gross proceeds or earnings of the business. It includes inwards freight and the cost of stock acquired when starting or acquiring a business during the year. It may also include some costs for labour and services provided under contract, if these are recorded in the cost of sales account in your business books of account. If so, don't include this amount as Contractor, sub-contractor and commission expenses.

If you are a primary producer, you must include the value of your purchases from your livestock account at PP5 on your primary production worksheet.

Completing this question

Step 1 Work out the value of your primary production purchases and other costs directly related to trading stock. If you have more than one business, add up all your primary production purchases and costs.

Step 2 Write the total value of your primary production purchases and other costs directly related to trading stock at Purchases and other costs in the Primary production column, P8 Expenses in your schedule. Don't show cents.

Step 3 Work out the value of your non-primary production purchases and other costs directly related to trading stock. If you have more than one business add up all your non-primary production purchases and other costs.

Step 4 Write the total value of your non-primary production purchases and other costs directly related to trading stock at Purchases and other costs in the Non-primary production column, P8 Expenses. Don't show cents.

Step 5 Add up your primary production and non-primary production purchases and other costs directly related to trading stock, and show the total at label L.

Former STS taxpayers

If you are eligible and are continuing to use the STS accounting method, write at label L only purchases and other costs that you have paid.

For more information, see Former simplified tax system (STS) taxpayers.

Closing stock

Answer the questions below to complete this label.

Did you have trading stock on hand at the end of the year?

• No – Go to Cost of sales.
• Yes – Read on.

Are you a small business entity choosing to use the simplified trading stock rules?

• No – Go to Other businesses.
• Yes – Read on.

Small business entities need to know

You need to account for changes in the value of your trading stock only if there is a difference of more than $5,000 between the value of all your stock on hand at the start of the income year and a reasonable estimate of the value of all your stock on hand at the end of the income year.

The value of your stock on hand at the start of the income year is the same value as the closing value shown in your schedule in the previous year. This may not necessarily reflect the actual value of your stock if you did not account for the change in value of your stock in the previous year. For more information on a reasonable estimate of the value of stock, read Simplified trading stock rules.

You can still choose to conduct a stocktake and account for changes in the value of trading stock, if you wish.

Is the difference between the value of your opening stock and a reasonable estimate of your closing stock more than $5,000?

• Yes – You must account for changes in the value of your trading stock. Go to step 2.
• No – If you choose not to account for changes in the value of your trading stock, go to step 1. Otherwise, go to step 2.

Completing this question

Step 1 If the difference referred to above is $5,000 or less and you choose not to account for this difference, the closing stock values you put in both the Primary production and Non-primary production columns at P8 Expenses in your schedule must be the same as the values you put at Opening stock. Don't put your reasonable estimate.

Add up your primary production and non-primary production closing stock values, and enter the total at label M.

Enter in the Type box at the right of label M the code letter you used last year to value closing stock:

• C cost
• M market selling value
• R replacement value.

If this is your first year in business, the value of your closing stock will be zero. Print C in the Type box.

Go to Cost of sales.

Step 2 If the difference referred to above is more than $5,000 or you choose to account for the difference in trading stock, the closing stock values must be brought to account under section 70-35 of the ITAA 1997. See Other businesses for how to complete this question.

You must include in your closing stock value at  P8 – label M the value of all stock on hand, regardless of whether you have paid for the stock.

Other businesses need to know

The amount you show at Closing stock is the total of the value of all items of trading stock, with the value of each item calculated for tax purposes in accordance with section 70-45 of the ITAA 1997.

Trading stock is anything you have on hand which you produced, manufactured, acquired or purchased for the purpose of sale, manufacture or exchange. For example, trading stock includes livestock but not working animals (except those used by a primary producer), crops and timber when harvested, and wool after it is removed from the sheep.

Manufacturers must include as trading stock partly manufactured goods and materials on hand. However, closing stock excludes any amount that represented closing stock of a business that ceased operations during the year. This amount is included in Other business income at  P8 – labels I or J.

For more information on what constitutes trading stock, see Simplified trading stock rules.

You can choose one of the following 3 methods to value your trading stock:

• cost
• market selling value
• replacement value.

You may elect to value an item of trading stock below the lowest value calculated by any of these methods. This may be because it has become obsolete or there are other special circumstances. The value you elect must be reasonable. Where you elect to value an item of trading stock below cost, market selling value and replacement value, you must complete  P19 in your schedule.

You may use different methods to calculate each item of trading stock in different years or for different items in the same year. However, the opening value of each item in a particular year must be the same as the closing value for that item in the previous year.

If you are registered for GST, the value of closing stock should not include an amount equal to the input tax credit that would arise if you had acquired the item solely for business purposes at the end of the income year. Input tax credits don't arise for some items of trading stock, such as shares.

If you are a primary producer, you must add the value of your closing stock from your livestock account at PP3 on your primary production worksheet to the value of your closing stock from your produce account at PP8 on your primary production worksheet.

The total of these amounts is the total value of your primary production closing stock.

As the tax values of closing stock on hand are shown at PP3 and at PP8 on your primary production worksheet, you can't reduce these values by accounting entries. Keep records showing how each item was valued.

Completing this item

Step 1 Work out the value of your primary production closing stock. If you have more than one business, add up all your primary production closing stock values.

Step 2 write the total value of your primary production closing stock at Closing stock in the Primary production column, item P8 in your schedule. Don't show cents.

Step 3 Work out the value of your non-primary production closing stock. If you have more than one business, add up all your non-primary production closing stock values.

Step 4 Write the total value of your non-primary production closing stock at Closing stock in the Non-primary production column. Don't show cents.

Step 5 Add up your primary production and non-primary production closing stock values and write the total at label M.

Step 6 From the list below, choose the letter that matches the method you used to value closing stock. If more than one method was used, select the letter that applies to the largest value:

• C cost
• M market selling value
• R replacement value.

Step 7 Print the letter from step 6 in the Type box at the right of the amount at label M.

Cost of sales

Answer the question below to complete this label.

Did you have any cost of sales?

• No – Go to Foreign resident withholding expenses.
• Yes – Read on.

You need to know

Goods taken for your own use should not be accounted for as stock on hand at 30 June 2024. Include at P8 – labels I and J in your schedule the value of:

• livestock killed for rations
• livestock exchanged for other goods or services
• goods taken for your own use.

Use worksheet 1 to work out your cost of sales.

Worksheet 1 – Cost of sales

Row	Calculation elements	Primary production	Non-primary production
a	Stock at 1 July 2023	$	$
b	Purchases at cost	$	$
c	Freight inwards	$	$
d	Other, for example, labour and services	$	$
e	Add the amounts at rows a, b, c and d	$	$
f	Stock at 30 June 2024	$	$
-	Your cost of sales: Take away the amount at row f from the amount at row e	$	$

For more information on stock on hand at 1 July 2023, see Opening stock. For more information on stock on hand at 30 June 2024, see Closing stock.

Completing this question

Step 1 Write your total primary production cost of sales at Cost of sales in the Primary production column, P8 Expenses in your schedule. Don't show cents.

Step 2 If the cost of sales in the Primary production column, after subtracting row f from row e, is a negative amount, print L in the box at the right of this amount.

Step 3 Write your total non-primary production cost of sales at Cost of sales in the Non-primary production column. Don't show cents.

Step 4 If the cost of sales in the Non-primary production column, after subtracting row f from row e, is a negative amount, print L in the box at the right of this amount.

Step 5 Add up your primary production and non-primary production cost of sales and write the total at Cost of sales in the Totals column.

Step 6 If your total cost of sales is a negative amount, print L in the box at the right of this amount.

Foreign resident withholding expenses (excluding capital gains)

Answer the question below to complete this label.

Did you have any expenses directly relating to income subject to foreign resident withholding (excluding capital gains)?

• No – Go to Contractor, sub-contractor and commission expenses.
• Yes – Read on.

Completing this question

Step 1 Write your total non-primary production foreign resident withholding expenses at Foreign resident withholding expenses (excluding capital gains) in the Non-primary production column, P8 Expenses in your schedule. Don't show cents.

Step 2 Transfer the amount you wrote at step 1 to the adjacent Totals box at label U.

You will not have any primary production expense amounts at this question.

Contractor, sub-contractor and commission expenses

Answer the question below to complete this label.

Did you have any contractor, sub-contractor or commission expenses in your business?

• No – Go to Superannuation expenses.
• Yes – Read on.

You need to know

These are expenses for labour and services provided under contract, other than salaries or wages, for example:

• payments to self-employed people, such as consultants and contractors, including payments subject to a PAYG voluntary agreement to withhold, and payments made under a labour-hire arrangement
• commissions paid to people not receiving a retainer
• agency fees (such as for services provided by an advertising agency)
• service fees (such as plant service)
• management fees
• consultant fees.

Don't include the following at this question:

• expenses for external labour which have been included in the business cost of sales account
• expenses for accounting or legal services; include these at All other expenses
• expenses for payments made where the associated withholding obligations have not been complied with. See Removing tax deductibility of non-compliant payments.

Completing this question

Step 1 Write your total primary production contractor, sub-contractor and commission expenses at Contractor, sub-contractor and commission expenses in the Primary production column,  P8 in your schedule. Don't show cents.

Step 2 Write your total non-primary production contractor, sub-contractor and commission expenses at Contractor, sub-contractor and commission expenses in the Non-primary production column. Don't show cents.

Step 3 Add up your primary production and non-primary production contractor, sub-contractor and commission expenses and write the total at label F.

Superannuation expenses

Answer the question below to complete this label.

Did you make any superannuation contributions on behalf of eligible employees or their dependants as a business expense?

• No – Go to Bad debts.
• Yes – Read on.

You need to know

Show superannuation expenses for the income year. Don't include any amount that was a contribution for yourself. The deduction for your own superannuation contributions must be claimed at question D12 in your supplementary tax return. See question D12 in Individual tax return instructions supplement 2024.

Employers are entitled to a deduction for the contributions they made to a complying superannuation, provident, benefit or retirement fund or retirement savings account (RSA) where the contributions are to provide superannuation benefits for employees or to provide benefits to the employee’s dependants on the employee’s death. A deduction is allowable in the income year in which the contributions are made.

Contributions made to a non-complying fund:

• are not allowable as a deduction, and
• don't count towards superannuation guarantee obligations.

You can check the compliance status of superannuation funds at superfundlookup.gov.auExternal Link.

Under the superannuation guarantee, an employer needs to provide a minimum level of superannuation for employees. If the employer doesn't make the minimum contribution by the relevant date, the employer is required to pay the superannuation guarantee charge on the superannuation guarantee shortfall. The superannuation guarantee charge is not a superannuation contribution and is not tax deductible. Contributions made by employers to offset a superannuation guarantee charge liability are not deductible.

Contributions paid by an employer to a non-complying superannuation fund on behalf of an employee are fringe benefits (other than where the contributions are made for a temporary resident) and may be subject to tax under the Fringe Benefits Tax Assessment Act 1986.

There is no age-related limit on deductions for contributions made on or before the 28th day following the end of the month in which the employee turns 75. However, the employee may be liable to pay additional tax if their concessional contributions exceed their concessional contributions cap.

For more information, see Super contributions – too much can mean extra tax.

For contributions made after the 28th day following the end of the month of the employee’s 75th birthday, the deduction claimable is limited to:

• the amount of the contribution required under an industrial award, determination or notional agreement preserving state awards, or
• the amount of the contribution that reduces an employer's charge percentage under the Superannuation Guarantee (Administration) Act 1992 in respect of the employee, or
• where both amounts are applicable, apply the greater of the 2 amounts.

Completing this question

Step 1 Write your total primary production superannuation contributions at Superannuation expenses in the Primary production column,  P8 in your schedule. Don't show cents.

Step 2 Write your total non-primary production superannuation contributions at Superannuation expenses in the Non-primary production column. Don't show cents.

Step 3 Add up your primary production and non-primary production superannuation contributions and write the total at label G.

Bad debts

Answer the question below to complete this label.

Did you write off any bad debts in your business?

• No – Go to Lease expenses.
• Yes – Read on.

You need to know

Include income from the recovery of bad debts in Other business income at P8 – labels I or J.

You are not allowed a deduction for bad debts unless you have previously included the amount in your assessable income and it relates to money you lent in the ordinary course of a money-lending business or it represents a business loss or outgoing of a revenue nature.

Before you can claim a bad debt, it must be bad and not merely doubtful. The question of whether a debt is a bad debt will depend on the facts in each case and, where applicable, the action taken for recovery.

Don't include accounting provisions for doubtful debts at label I. You show them in the Expenses section at All other expenses, then add them back at label H Expense reconciliation adjustments in the Reconciliation items section.

For more information, see Taxation Ruling TR 92/18 Income tax: bad debts.

You can also claim a deduction for:

• partial debt write-offs; where only part of a debt is bad and is written off, you may claim a deduction for the amount written off
• losses incurred for debt written off under a debt-for-equity swap where you discharge, release or otherwise extinguish the whole or part of a debt owed to you in return for equity in the debtor.

In the case of a debt-for-equity swap, you can claim a deduction for the difference between the amount of the debt and the greater of the market value of the equity at the time of issue or the value of the equity recorded in your books at the time of issue.

Keep a statement for all debtors whose bad debts you wrote off during 2023–24, showing:

• their name and address
• the amount of the debt
• the reason you regarded the debt as bad
• where applicable, the year in which you included the amount as income.

Completing this question

Step 1 Write your total primary production bad debts at Bad debts in the Primary production column,  P8 in your schedule. Don't show cents.

Step 2 Write your total non-primary production bad debts at Bad debts in the Non-primary production column. Don't show cents.

Step 3 Add up your primary production and non-primary production bad debts and write the total at label I.

Lease expenses

Answer the question below to complete this label.

Did you have lease expenses in your business?

• No – Go to Rent expenses
• Yes – Read on.

You need to know

This is expenditure incurred on financial leases and on operating leases for assets such as motor vehicles and plant. Don't include the cost of leasing real estate (show this cost at label K Rent expenses).

If you include capital expenditure incurred to terminate a lease or licence, you will need to add back the amount at label H Expense reconciliation adjustments. Although capital expenditure to terminate a lease or licence is not deductible in one year, a 5-year straight-line write-off may be allowable (see section 25–110 of the ITAA 1997) for certain capital expenditure incurred to terminate a lease or licence if the expenditure is incurred in the course of carrying on a business, or in connection with ceasing to carry on a business, see worksheet 4 and note 3.

In some circumstances, lease expenses may be debt deductions for the purposes of the Thin capitalisation rules.

If you include an amount of lease expense which is not allowable as a deduction, such as amounts disallowed under the thin capitalisation rules, you will need to add back the amount at label H Expense reconciliation adjustments in the Reconciliation items section in your schedule.

Expenses incurred under a hire purchase agreement are not lease expenses. Such expenses are dealt with at label H Expense reconciliation adjustments in the Reconciliation items section in your schedule.

Special rules apply to leased cars if the cost of the car exceeds the car limit that applies for the financial year in which the lease commences. The car limit for 2023–24 is $68,108.

If you lease a car that is subject to the special rules, the reconciliation between the lease expense and the tax treatment is carried out at label H Expense reconciliation adjustments in the Reconciliation items section.

For more information, see Luxury car leasing.

List the assets leased and keep full details of the leasing expenses for each item, including motor vehicles and details of any private use. Leasing expenses of certain cars fall under the substantiation rules.

Completing this item

Step 1 Write your total primary production lease expenses at Lease expenses in the Primary production column,  P8 in your schedule. Don't show cents.

Step 2 Write your total non-primary production lease expenses at Lease expenses in the Non-primary production column. Don't show cents.

Step 3 Add up your primary production and non-primary production lease expenses and write the total at label J.

Rent expenses

Answer the question below to complete this label.

Did you have rent as a business expense?

• No – Go to Interest expenses within Australia.
• Yes – Read on.

You need to know

This is expenditure you incurred as a tenant for rental of land and buildings used in the production of income. Include the cost of leasing real estate.

Completing this question

Step 1 Write your total primary production rent expenses at Rent expenses in the Primary production column, P8 Expenses in your schedule. Don't show cents.

Step 2 Write your total non-primary production rent expenses at Rent expenses in the Non-primary production column. Don't show cents.

Step 3 Add up your primary production and non-primary production rent expenses and write the total at label K.

Interest expenses within Australia

Answer the question below to complete this label.

Did you incur interest as a business expense on money borrowed within Australia?

• No – Go to Interest expenses overseas.
• Yes – Read on.

You need to know

Include interest you incurred on money borrowed within Australia to acquire income-producing assets used in your business, to finance business operations or to meet current business expenses.

Don't include interest incurred in deriving rental income. Claim this at question 21 in your supplementary tax return.

If you include an amount of interest which is not allowable as a deduction, such as amounts denied by the Thin capitalisation rules, you will need to add back the amount at label H Expense reconciliation adjustments in the Reconciliation items section in your schedule.

Completing this question

Step 1 Write your total primary production interest expenses within Australia at Interest expenses within Australia in the Primary production column, P8 Expenses in your schedule. Don't show cents.

Step 2 Write your total non-primary production interest expenses within Australia at Interest expenses within Australia in the Non-primary production column, P8 Expenses in your schedule. Don't show cents.

Step 3 Add up your primary production and non-primary production interest expenses within Australia and show the total at label Q.

Interest expenses overseas

Answer the question below to complete this label.

Did you incur interest as a business expense on money borrowed overseas?

• No – Go to Depreciation expenses.
• Yes – Read on.

You need to know

Include any interest incurred on money borrowed from overseas sources to acquire income-producing assets used in your business:

• to finance business operations, or
• to meet current business expenses.

Don't include interest incurred in deriving rental income. Claim this at question 21 in your supplementary tax return.

Generally, you are required to withhold an amount of withholding tax:

• from interest paid or payable to non-residents, and
• from interest derived by a resident through an overseas branch.

You must send these withheld amounts to us. You can't deduct an interest expense if you were required to withhold tax on that interest and you failed to do so.

If you paid or credited any interest or amounts in the nature of interest to a non-resident of Australia, or to a resident’s overseas branch, you need to provide additional information. On a separate piece of paper write:

• the title Schedule of additional information – question 15
• your name, address and TFN
• the name and address of each recipient
• the total amounts paid or credited
  • to each non-resident, and
  • to the overseas branch of each resident
• the amount of tax withheld, if no tax was withheld, state the reason.

Then:

• print X in the Yes box at Taxpayer’s declaration
• attach the schedule to page 3 of your tax return.

For more information on the tax treatment of interest paid to non-residents, contact us.

If you include an amount of interest which is not allowable as a deduction, such as amounts denied by the Thin capitalisation rules, you will need to add back the amount at label H Expense reconciliation adjustments in the Reconciliation items section in your schedule.

Completing this question

Step 1 Write your total primary production overseas interest expenses at Interest expenses overseas in the Primary production column, P8 Expenses in your schedule. Don't show cents.

Step 2 Write your total non-primary production overseas interest expenses at Interest expenses overseas in the Non-primary production column. Don't show cents.

Step 3 Add up your primary production and non-primary production overseas interest expenses and write the total at label R.

Depreciation expenses

Did you have depreciation as a business expense?

• No – Go to, Motor vehicle expenses.
• Yes – Small business entities choosing Simplified depreciation rules, read the below. All other entities, go to Other businesses (excluding small businesses using simplified depreciation).

You don't include the pool deductions at P8 – label M, if you are not carrying on a business this year, but in a prior year you allocated assets to a general small business pool. Show such deductions at question D15 Other deductions in your supplementary tax return.

Small business entities

You show at P8 – label M the total depreciation deductions:

• under the simplified depreciation rules; and
• for the business use of other assets under the uniform capital allowances (UCA) rules.

However, this excludes any amount included at P1 – Part B.

Some depreciating assets are excluded from the simplified depreciation rules, but a deduction may be available for these assets under the UCA rules. For more information, see Assets and exclusions. Special rules also apply if the depreciating asset is a passenger vehicle.

If you are a small business entity and are choosing to use these simplified depreciation rules, you must claim an immediate deduction and use pooling as applicable. You can't choose to use one and not the other.

How to calculate your depreciation deductions

If you are a small business entity using simplified depreciation, use Worksheet 2 and the Calculations in Appendix 1 to work out your depreciation deductions. Your accounting system or financial statements may provide you with the amounts for depreciation.

How to complete P8 Expenses – Depreciation expenses

Step 1: Write your total primary production depreciation deductions in the primary production column at P8 – label Depreciation expenses. Don't show cents.

Step 2: Write your total non-primary production depreciation deductions in the non-primary production column P8 – label Depreciation expenses. Don't show cents.

Step 3: Transfer the total amount at row e in Worksheet 2 to P8 – label M Depreciation expenses. Don't show cents.

Step 4: Go to P10 Small business entity simplified depreciation – you will need to transfer amounts from Worksheet 2 – rows a, b and c.

Step 5: Go to Motor vehicle expenses.

Work out your depreciation and capital allowance claims by using the Depreciation and capital allowances toolThis link opens in a new window.

Other businesses (excluding small businesses using simplified depreciation)

You show at P8 – label M Depreciation expenses the depreciation claimed in your accounting books other than for those assets allocated in a prior year to a general pool. For assets allocated to such a pool, include here the amount of the pool deduction to be claimed for tax purposes.

The depreciation amount you show at P8 – label M should not include profit or loss on the sale of depreciating assets. Include profits on the sale of depreciating assets at P8 – labels I or J Other business income in your schedule. You should include losses on the sale of depreciating assets at P8 – label P All other expenses.

Accounting or book depreciation may differ from your deduction for the decline in value of depreciating assets for tax purposes.

You carry out the reconciliation between accounting depreciation and the deduction for decline in value at P8 Reconciliation items – label H Expense reconciliation adjustments.

For more information, see Guide to depreciating assets 2024.

Motor vehicle expenses

Answer the question below to complete this label.

Did you have motor vehicle expenses in your business?

• No – Go to Repairs and maintenance.
• Yes – Read on.

You need to know

Special substantiation and calculation rules for car expenses apply to you, as an individual. Under these rules, you can claim motor vehicle expenses using one of 2 methods where the expense is for a car, station wagon, panel van, utility truck or other road vehicle designed to carry a load of less than one tonne or fewer than 9 passengers. For an explanation of these methods, see question D1 in Individual tax return instructions 2024.

Include motor vehicle expenses related to ride-sourcing activities at this question.

Don't include depreciation, finance leasing charges or interest paid. You include these at P8 Expenses in your schedule under:

• M Depreciation expenses
• J Lease expenses
• Q Interest expenses within Australia, or
• R Interest expenses overseas.

Completing this question

Step 1 Write your total primary production motor vehicle expenses at Motor vehicle expenses in the Primary production column, P8 Expenses in your schedule. Don't show cents.

Step 2 Write your total non-primary production motor vehicle expenses at Motor vehicle expenses in the Non-primary production column. Don't show cents.

Step 3 Add up your primary production and non-primary production motor vehicle expenses and write the total at P8 – label N in your schedule.

Step 4 If you worked out the amount you are claiming for motor vehicle expenses using one of the 2 methods described in question D1 in Individual tax return instructions 2024, find the code letter that identifies the method you used and print it in the Type box at the right of the amount at label N:

• S if you used the ‘cents per kilometre’ method
• B if you used the ‘logbook’ method.

Print the code letter N in the Type box if the amount shown at label N relates to:

• a motorcycle
• a taxi taken on hire
• a road vehicle designed to carry a load of one tonne or more, or 9 or more passengers
• any other motor vehicle expenses covered by question D2 in Individual tax return instructions 2024.

If you have more than one code, print the code that applies to the largest claim.

Repairs and maintenance

Answer the question below to complete this label.

Did you have repairs and maintenance as a business expense?

• No – Go to All other expenses.
• Yes – Read on.

You need to know

This is expenditure shown in your accounts for repairs and maintenance of premises, plant, machinery, implements, utensils, rolling stock or articles associated with the production of income. Any non-deductible expenditure, such as items of a capital nature or amounts relating to private use of an item, included at this question, should also be included at P8 Reconciliation items – label H Expense reconciliation adjustments in your schedule. The following information on deductions for repairs will assist you to work out whether you need to make an expense reconciliation adjustment.

Repairs

You may deduct the cost of repairs (not being expenditure of a capital nature) to premises and depreciating assets such as plant, machinery or equipment used solely for producing assessable income, or in carrying on a business for that purpose.

Expenditure on repairs to property used partially for business or income-producing purposes (such as where the property is also used for private purposes or in the production of exempt income) is deductible only to the extent it is used for business or income-producing purposes.

Where items are newly acquired, including by way of a legacy or gift, the cost of repairs to defects present at the time of acquisition is generally of a capital nature.

Expenditure incurred in making alterations, additions or improvements is of a capital nature and is not deductible as repairs.

For more information, see Taxation Ruling TR 97/23 Income tax: deductions for repairs.

To support your claim for the cost of repairs, you must keep full details, including source documents of the nature and cost of repairs to each item.

Completing this question

Step 1 Write your total primary production repairs and maintenance expenses at Repairs and maintenance in the Primary production column, P8 Expenses in your schedule. Don't show cents.

Step 2 Write your total non-primary production repairs and maintenance expenses at Repairs and maintenance in the Non-primary production column. Don't show cents.

Step 3 Add up your primary production and non-primary production repairs and maintenance expenses and write the total at label O. Don't show cents.

All other expenses

Answer the question below to complete this label.

Did you have any other business expenses?

• No – Go to Total expenses.
• Yes – Read on.

You need to know

This is the total of all other expenses which you incurred in deriving your profit or loss and which you have not already shown elsewhere at P8 Expenses. Other expenses include wages, accounting and professional fees, advertising, office supplies, foreign exchange (forex) losses and any loss on the sale of a depreciating asset as shown in your accounts.

Include gifts and donations that are a business expense and amounts you pay professionals in managing the tax affairs of the business at P8 Expenses. Don't claim these amounts as gifts and donations or as cost of managing tax affairs in your individual tax return.

If you are an eligible primary producer also include deductions related to becoming the holder of, holding and disposing of eligible Australian carbon credit units (ACCUs) or income from eligible arrangements with carbon service providers, in the primary production column. For more information on eligible ACCUs and eligible arrangements with carbon service providers, see Taxation of Australian carbon credit units for primary producers.

For information about foreign exchange (forex) losses, go to ato.gov.au or see question D15 in Individual tax return instructions supplement 2024.

Include capital and other non-deductible items (including debt deductions denied by thin capitalisation rules) shown here at P8 Reconciliation items – label H Expense reconciliation adjustments in your schedule.

For more information, see:

• Income and expense reconciliation adjustments
• Thin capitalisation rules.

Home office expenses

If part of your home was specifically set aside as your place of business and used solely for the purpose of conducting your business affairs and you had no other place from where they were mainly carried on, the following expenses are partly deductible:

• occupancy expenses, including rent, mortgage interest, rates, and house and contents insurance
• running expenses, including electricity, cleaning, depreciation, leasing charges and repairs to furniture and furnishings in the office.

In most cases, you can apportion expenses on a floor area basis and, if the area of your home was a place of business for only part of the year, on a time basis.

Where you used part of your home as a home office, but it did not qualify as a place of business, only the additional running expenses you incurred may be deductible.

For more information, see:

• Taxation Ruling TR 93/30 Income tax: deductions for home office expenses
• Law administration practice statements PS LA 2001/6 Verification approaches for home office running expenses and electronic device expenses records you need to keep
• Practical compliance guide PCG 2023/1 Claiming a deduction for additional running expenses incurred while working from home – ATO compliance approach.

You should keep records to show how you have calculated your home office expenses. We may ask you for these at a later date.

Completing this question

Step 1 Write your total ‘other’ primary production expenses at All other expenses in the Primary production column, P8 Expenses in your schedule. Don't show cents.

Step 2 Write your total ‘other’ non-primary production expenses at All other expenses in the Non-primary production column. Don't show cents.

Step 3 Add up your ‘other’ primary production and ‘other’ non-primary production expenses and write the total at P8 – label P in your schedule.

Total expenses

To complete this label, follow the instructions below.

Completing this question

Step 1 Add up all the expenses you have written in the Primary production column, from Cost of sales down to and including All other expenses. Write the total at P8 – label S in your schedule. Don't show cents.

Step 2 If your total of primary production expenses is a negative amount, print L in the box at the right of the amount at label S.

Step 3 Add up all the expenses you have written in the Non-primary production column, from Cost of sales down to and including All other expenses. Write the total at label T. Don't show cents.

Step 4 If your total of non-primary production expenses is a negative amount, print L in the box at the right of the amount at label T.

Step 5 Add up your primary production and non-primary production expenses. Write the total at TOTAL EXPENSES in the Totals column.

Step 6 If your total expenses is a negative amount, print L in the box at the right of this amount.

Continue to: Reconciliation items

Return to: Business income and expenses – P8