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vincetan(Newbie)Newbie
26 July 2023

Our business is in Early Childhood Education and have leased premises for running our Early Childhood Education Service. My question relates to the Bank Guarantee Fees that the bank charges us annually to maintain our bank guarantee as required as part of the lease.


Is this fee tax deductible in the year it is incurred? I cannot find any ruling on ATO and out Tax agents seem to suggest it is capital and needs to be amortised and claimed over a Five-year period? However this doesn't seem to be substantiated by any Tax law/ruling and I am of the opinion that the Bank Guarantee Fee is not capital and is actually expenses incurred to produce assessable income and should be claimable in the year it is incurred.

4,812 views
1 replies
4,812 views
1 replies

Most helpful response

Most helpful reply

DanielleATO(Community Support)Community Support
31 July 2023

Hi @vincetan,


When it comes to business tax deductions. There are 3 golden rules for what we accept as a valid business deduction:

1. The expense must have been for your business, available as an allowable deduction and not for private use.

2. If the expense is for a mix of business and private use, you can only claim the portion that is used for your business.

3. You must have records to prove it.


Generally, you can claim operating expenses in the year that you incur them.


There is some great information for what you can and cannot claim as a business tax deduction you may find helpful.

All replies

Most helpful reply

DanielleATO(Community Support)Community Support
31 July 2023

Hi @vincetan,


When it comes to business tax deductions. There are 3 golden rules for what we accept as a valid business deduction:

1. The expense must have been for your business, available as an allowable deduction and not for private use.

2. If the expense is for a mix of business and private use, you can only claim the portion that is used for your business.

3. You must have records to prove it.


Generally, you can claim operating expenses in the year that you incur them.


There is some great information for what you can and cannot claim as a business tax deduction you may find helpful.

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Are Bank Guarantee Fees incurred to maintain a BG for leasing a business premise tax deducible? | ATO Community