ATO ID 2002/484: Pay TV expenses
Date of decision: 6 July 1998
Business line: Individuals

Issue
Is the taxpayer, an accountant, entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 for pay TV subscription fees paid to access a professional education channel?

Decision
Yes, there is a sufficient nexus between the income producing activities of the taxpayer and the content of the pay TV channel so that the subscription fee is an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 . The connection fee however, is a capital expense and not an allowable deduction. The subscription fee for the base pay TV channels is private expenditure under paragraph 8-1(2)(b) of the Income Tax Assessment Act 1997 and is not an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 .

Facts
The taxpayer is employed as an accountant and subscribes to pay TV in order to access a professional education channel. The professional education channel is a tier channel and is not included in the standard base package supplied by the pay TV operator. The professional education channel has received accreditation from the Accountant's Governing Body to deliver content that specifically meets the needs of its members and does not show any content of an entertainment nature. The taxpayer incurs the following expenses, connection fee; subscription for base package and additional subscription for the professional education channel.

Reasons for decision
Summary: In order for an expenditure to be deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997), it must have the essential character of an outgoing incurred in gaining assessable income ( Lunney v. FCT (1958) 100 CLR 478). There must be a sufficient nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income ( Ronpibon Tin NL v. FCT (1949) 78 CLR 47). The expenditure must not be capital, private or domestic in nature. The base package provided by the pay TV operators is an entertainment product and is essentially of a private or domestic nature. The subscription fee for the base product would therefore not qualify as an allowable deduction under section 8-1 of the ITAA 1997. Any initial connection cost or one-off membership fee will not be an allowable deduction as they are of capital and/or private nature ( Case M53 80 ATC 357; (1980) 24 CTBR(NS) 234). Taxation Ruling TR 98/14 Income tax: employee journalists - allowances, reimbursements and work related deductions (TR 98/14) discusses whether a deduction is allowable for Pay TV expenses by journalists. The TR 98/14 states that even though a taxpayer may be able to use part of the information obtained in the course of their work, the benefit gained is usually remote and the proportion of the expense that relates to work is incidental to the private expenditure. However it also provides that in some instances a journalist may be required to access pay TV as a direct consequence of his/her employment. The content of the education program has received accreditation from the Accountant's Governing Body and the content of the program specifically meets the needs of its member accountants. The entire education channel relates to the taxpayer's work and is incidental and relevant to the taxpayer's employment as an accountant. The taxpayer is entitled to a deduction for the additional subscription fee for access to the education channel under section 8-1 of the ITAA 1997.

Legislative references: Income Tax Assessment Act 1997 section 8-1
Case references: Lunney v. FCT (1958) 100 CLR 478
Related public rulings and determinations: TR 98/14
Other references: Previously Released as CDS10390
Subject references: Deductions & expenses Continuing professional development expenses Private or domestic expenses Self education expenses Work related expenses