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, the partnership can claim a deduction of 50% of the LIC capital gain amount. The listed investment company's dividend advice statement shows 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 item 18 Q - for more information, see appendix 6.

Even if the TOFA rules apply to the partnership, show at P all deductions relating to Australian investment income. This includes amounts from financial arrangements subject to the TOFA rules.

If what you show at P includes an amount which is brought to account under the TOFA rules, also complete item 31 'Taxation of financial arrangements (TOFA)'.

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.