Tax Deduction for Interest, Dividend and other Investment Income? 2025–26 Guide

Updated for the 2025–26 income year (tax returns lodged from 1 July 2026), with 2026–27 changes noted. Reviewed 19 October 2026.

Did you know you can claim expenses you incur to earn interest, dividends and other investment income? You must also declare that income in full – the ATO receives data from banks, share registries and fund managers.

1. Interest from bank accounts and income bonds

Interest is assessable income. You can claim account-keeping fees on accounts held for investment purposes. For joint accounts, declare and claim only your share – for example, half if you hold an equal share with your spouse.

2. Dividends and shares

Declare dividends (franked and unfranked) and franking credits. Franking credits can reduce your tax and, for eligible individuals, may be refunded. Deductions can include:

• interest on money borrowed to buy income-producing shares or investments
• ongoing management fees, retainers and ongoing advice fees relating to your investments
• specialist investment journals and subscriptions
• the investment-use portion of internet costs and the decline in value of a computer used to manage investments
• some travel to manage existing investments, for example to attend the annual general meeting of a company you hold shares in
• the portion of an investment seminar that relates to investments you already hold
• borrowing costs on investment loans (often spread over 5 years or the loan term, if shorter)

Not deductible: brokerage and other transaction costs (they go into the CGT cost base instead), seminars about investments you are only considering, interest under some capital-protected borrowing arrangements, and interest where the investment produces only exempt income. If you use a loan partly for private purposes, apportion the interest.

Fees for an initial financial plan or advice to set up a portfolio are generally not deductible, because they relate to acquiring the investments rather than earning income from them.

3. LIC capital gain amount

If you were an Australian resident when a listed investment company (LIC) paid you a dividend that included a LIC capital gain amount, you can generally claim a deduction of 50% of that amount.

4. ATO interest charges are no longer deductible

From 1 July 2025, general interest charge (GIC) and shortfall interest charge (SIC) the ATO imposes are not deductible, even if the underlying debt relates to an earlier year. Paying tax on time matters more than ever.

5. Worked example

Example (illustrative figures only): Raj borrows $50,000 to buy shares and pays $3,200 interest in 2025–26. He receives $2,100 in fully franked dividends with $900 franking credits, and pays $300 in ongoing advice fees. He declares $3,000 ($2,100 + $900) and claims $3,500 in deductions. The net loss can reduce his other taxable income.

6. Capital gains: changes from 1 July 2027

Under legislation from the 2026–27 Budget, from 1 July 2027 the 50% CGT discount for individuals, trusts and partnerships will be replaced with cost base indexation and a 30% minimum tax rate on capital gains. It only applies to gains that accrue after 1 July 2027. Keep good records of purchase dates and cost bases now. See our capital gains tax guide and crypto tax guide.

Investment expenses don't reduce the $1,000 standard deduction that starts in 2026–27 – keep claiming them separately. See also income to declare on your tax return.