If you earn income from investments — shares, property, managed funds, or interest — the expenses directly related to earning that income are deductible. This includes interest on loans used to purchase investments, account fees, and the cost of managing and monitoring income-producing assets.
The Basic Rule
Investment expenses are deductible if:
- The expense is incurred in producing assessable income (dividends, interest, rent, capital gains are assessable)
- The investment itself is income-producing (an asset that currently produces income, not one held purely for capital growth)
- The expense is not capital in nature (purchasing an investment is capital — managing it is revenue)
Interest on Investment Loans
The most valuable investment deduction for many Australians. If you borrowed money to:
- Purchase shares or ETFs
- Purchase an investment property
- Invest in a managed fund
- Fund other income-producing investments
The interest charged on the loan is deductible against the income those investments produce.
Important for property investors: The interest must relate to the period the property was available for rent (see rental property articles for details on vacant property and private use apportionment).
Margin loans: Interest on margin loans used to buy shares is deductible. However, if the loan funds drop in value during the year and you face margin calls, the deductibility depends on what the borrowed funds were used for.
Share Investment Expenses
| Expense | Deductible? |
|---|---|
| Interest on loan used to buy shares | Yes |
| Dividend reinvestment plan (DRP) fees | Yes |
| Investment account fees (brokerage platform subscriptions) | Yes — if directly related to managing income-producing investments |
| Brokerage (buying/selling shares) | No — this is part of the cost base for CGT (not a deductible expense) |
| Investment newsletter, subscriptions (for current income-producing investments) | Yes — work/investment proportion |
| Tax advice fees related to investment income | Yes |
| ASIC search fees for investment research | Yes |
Note: Brokerage is not a deductible expense against income — it forms part of the cost base of the shares for CGT purposes.
Managed Funds and ETFs
Management fees charged by managed fund providers or ETF managers (MER — management expense ratio) are typically deducted within the fund before distributions are paid to you. You do not separately claim these on your return — they are already reflected in the income (or reduced income) distributed.
Investment Advice Fees
The cost of financial advice is deductible to the extent it relates to managing existing income-producing investments:
- Advice on managing a share portfolio generating dividends: potentially deductible
- Advice on whether to switch between managed funds: potentially deductible
- Initial advice on setting up a super strategy: not deductible (relates to super, not assessable income)
- Advice on whether to purchase a new investment (capital decision): not deductible as revenue
This is a complex area — seek advice on whether specific financial advice fees are deductible in your circumstances.
Rental Property Deductions
Rental property investors have a particularly wide range of deductible expenses. See the dedicated guides:
What Is Not Deductible
- The cost of purchasing an investment (this is capital — goes to cost base for CGT)
- Capital improvements to an investment property (depreciated, not immediately deductible)
- Losses from selling investments (these become capital losses, not revenue deductions)
- Expenses for assets that do not currently produce income (e.g., vacant land not producing rent)
Frequently Asked Questions
I have a margin loan on shares that pay no dividends. Can I still deduct the interest? The deductibility of interest depends on whether the shares were acquired with the purpose of producing assessable income (dividends, or gains assessable as income for a share trader). For ordinary investors (not share traders), the ATO requires a reasonable expectation of income. Shares with no dividend history are more difficult to justify — seek specialist advice.
Can I deduct the cost of financial planning software I use to track my investments? If the software is used to manage income-producing investments and the subscription is paid by you personally, the work/investment proportion may be deductible.
I lost money on an investment. Can I deduct the loss? Capital losses from investment assets reduce capital gains in the current year or are carried forward to offset future capital gains. They are not revenue deductions against other income.
This article provides general tax information. For advice tailored to your situation, speak with a registered tax agent. Find one through the Tax Practitioners Board register.