Management fees
You can claim ongoing management fees or retainers to investment advisers as a deduction. Only claim part of the fee if the advice covers non-investment matters or relates in part to investments that don't produce assessable income. You can't claim a deduction for a fee paid to draw up an initial investment plan.
Interest
If you borrow money to buy shares, you can claim a deduction for the loan interest, provided it is reasonable to expect that you'll receive assessable dividends. Where the loan was also used for private purposes, only claim interest on the part used to acquire the shares.
Interest on capital protected borrowings
A capital protected borrowing arrangement allows you to acquire listed shares, units or stapled securities with borrowing that protects you from market value falls.
Interest from capital protected borrowing arrangements for shares, units, or stapled securities, entered into or extended on or after 1 July 2007, is not deductible. The interest is treated as if it were a payment for a put option. This treatment applies where the shares, units or stapled securities are held on capital account for investment purposes.
The interest amount attributable to capital protection is worked out using the methodology applicable to the type of capital protected borrowing.
Travel expenses
You may be able to claim travel expense deductions where you need to travel to service your investment portfolio. For example, to consult with a broker or to attend a stock exchange or company meeting. You can claim the full amount of your expenses where the sole purpose of the travel relates to the share investment. Where the travel is mainly for private purposes, only claim the expenses directly related to servicing your portfolio.
Cost of journals and publications
You may be able to claim the cost of purchasing specialist investment journals and other publications, subscriptions or share market information services which you use to manage your share portfolio. See Taxation Determination TD 2004/1 Income tax: are the costs of subscriptions to share market information services and investment journals deductible under section 8-1 of the Income Tax Assessment Act 1997?
Internet access and computers
You can claim some internet access costs if you use it to manage your portfolio. For example, if you use an internet broker to buy and sell shares. Only the portion of internet use for managing shares is deductible. You can't claim a deduction for the private use portion.
You can claim for the decline in value (previously known as depreciation) of your computer equipment. The applies to the extent the equipment is used for income-producing purposes. You can't claim a capital allowance for the private use portion.
Borrowing expenses
You may be able to claim expenses for taking out a loan to buy shares that are expected to produce dividend income. The expenses may include establishment fees, legal expenses and stamp duty on the loan. If your expenses total more than $100, apportion them over 5 years or the loan term, whichever is shorter. If your expenses are $100 or less, you can claim a deduction for the full amount in the year you incur them.
Dividends that include listed investment company capital gain amounts
If a listed investment company (LIC) pays a dividend to you that includes a LIC capital gain amount, you may be entitled to a deduction.
You can claim a deduction if:
- you're an individual
- you were an Australian resident when a LIC paid you a dividend
- the dividend was paid to you after 1 July 2001, and
- the dividend included a LIC capital gain amount from a CGT event involving an asset owned by the LIC for at least 12 months.
The amount of the deduction is 50% of the LIC capital gain amount. The LIC capital gain amount will be shown separately on your dividend statement.
You don't show the LIC capital gain amount at question 18 Capital gains in your tax return.
Other deductions
You can claim any other expenses which relate directly to maintaining your portfolio. These could include bookkeeping expenses and postage.
Deductions in a foreign currency
Translate all foreign currency deductions into Australian dollars before you claim them in your Australian tax return. For more information on exchange rates and how to translate foreign currency, see:
Expenses you can't claim
Unless you are carrying on a business of share trading, you can't claim a deduction for the cost of acquiring shares (for example, expenses for brokerage and stamp duty). These will form part of the cost base for CGT purposes when you dispose of the shares. Unless you are carrying on a business of share trading, you can't claim a deduction for a loss on the disposal of shares. The loss is a capital loss for CGT purposes. For more information, see Personal investors guide to capital gains tax 2024.