Investment expenses you can claim at tax time

If you’ve made investments this financial year, you might be able to claim some of the costs involved as tax deductions. Here’s a simple rundown of what you may be able to deduct – and how.

What might be claimable?

In Australia, if you earn income from your investments – like dividends from shares or interest from bonds – you can generally claim a tax deduction for the expenses you incurred to earn that income. These might include:

• Borrowing costs and interest charged on money borrowed to purchase investments.
• Ongoing account-keeping fees on an account held for investment purposes (but note that if you have a joint account, you should only claim your share of the fees).
• The portion of costs you’ve incurred to manage your investments – such as subscriptions to specialist investment journals or share market data services.

What is not claimable?

For any of your investments held on capital account: while it might be tempting to claim everything at tax time, you cannot deduct certain investment-related costs right away (like stamp duty, brokerage fees or the purchase price of your investment). Instead, these expenses are bundled into what's called the cost base of your asset. 

Your cost base in a CGT asset is generally what it cost you to buy it, plus other costs you incurred to hold and dispose of it. Your cost base usually comes into play later, such as when you're working out your capital gain after selling your investments.

How to claim

When tax time rolls around, keep your receipts and statements handy; not only will you need them to back up your claims but the ATO has certain requirements about what records you need, the format you need to keep them in and how long to keep them.

Most platforms, like CommSec, let you download a tax summary to make life easier. You (or your accountant) can then plug the relevant deductions into your tax return.

Keep it real

The golden rule: only claim expenses that have a connection with your income-earning activities – and only for the portion that’s investment-related. That means if you have incurred the expense for both private and income-producing purposes, you need to apportion the expense between each purpose. If you’re unsure, chat with a registered tax agent.