Who can claim
This deduction is available to individuals and companies.
- For an immediate start-up deduction, an eligible entity incurs professional advice or services about the proposed business structure or operation, or pays an Australian government fee, tax or charge connected with setting up or operating the proposed business.
- Other qualifying business-related capital expenditure can satisfy section 40-880 where it relates to a current, former or proposed business and is not otherwise recognised by the income-tax law.
What you cannot claim
- The purchase price of a business, goodwill, land, a depreciating asset or another asset is not an immediate start-up deduction.
- Private or domestic expenditure, expenditure deductible elsewhere, and amounts forming part of an asset's cost or CGT cost base are excluded from section 40-880.
- For an individual, the non-commercial-loss rules can defer an otherwise available business deduction.
How the amount is worked out
Immediately deduct eligible professional advice, services and government payments where the start-up concession and entity conditions are met. For other qualifying section 40-880 expenditure, deduct 20% in the year incurred and in each of the next four income years. Do not treat acquisition or asset costs as start-up deductions.
Records the ATO expects
- Detailed professional invoices
- Government payment records
- Proposed-business plan and purpose
- Entity and aggregated-turnover evidence
- Five-year deduction schedule where relevant
- Non-commercial-loss review for individuals
Before you rely on this rule
Classify each cost before choosing immediate deduction, five-year write-off, asset treatment or non-commercial-loss deferral.
Where this rule comes from
Primary source: Income Tax Assessment Act 1997 section 40-880 (Section 40-880). Reviewed 30 July 2026. Covers the 2025-26 and 2026-27 income years.
Supporting sources:
- ATO business income and deductions (Updated 1 June 2023)