Private ruling: Deductibility of payments
Published: September 2011
Ruling period: Income year ended 30 June 2010
Date scheme commenced: During the year ended 30 June 2010

Ruling: Q1: Does section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) permit a deduction to an entity for specific payments (the payments)? | A1: Yes. | Q2: Will Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936) apply to the arrangement? | A2: No.

Relevant facts and circumstances: An entity has made the payments.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 177A(1) | Income Tax Assessment Act 1936 Section 177C | Income Tax Assessment Act 1936 Subsection 177C(1) | Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Subsection 8-1(1) | Income Tax Assessment Act 1997 Subsection 8-1(2) | Income Tax Assessment Act 1997 Paragraph 8-1(2)(a) | Income Tax Assessment Act 1997 Paragraph 8-1(2)(b) | Income Tax Assessment Act 1997 Paragraph 8-1(2)(c) | Income Tax Assessment Act 1997 Paragraph 8-1(2)(d)

Reasons for decision: Summary: It is considered the payments have the character of a loss or outgoing incurred in the course of gaining or producing assessable income or in carrying on a business for the purpose of gaining or producing assessable income. The payments are not considered to be a loss or outgoing of capital or of a capital nature. On the basis that paragraphs 8-1(2)(b) of the ITAA 1997 to paragraph 8-1(2)(d) of the ITAA 1997 have no application, the entity is entitled to claim a deduction for the payments pursuant to subsection 8-1(1) of the ITAA 1997. Part IVA of the ITAA 1936 has no application.

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