Private ruling: Assessable income
Date of advice: 25 March 2020
Published: May 2020
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are donated supplies and services provided in a federal election campaign assessable income? | A1: No

Relevant facts and circumstances: You were a candidate for the 20XX Federal election in a Federal electorate. You held a media launch coincident with registration as a candidate for this seat. You received various offers for donated supplies and services.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Section 25-60 | Income Tax Assessment Act 1997 Subdivision 20-A

Reasons for decision: Detailed Reasoning - Gifts and donations: Donations are generally made to political candidates to help fund their campaign. Donations up to $1500 to independent political candidates are deductible to the donor, however an individual does not start being an independent candidate until the candidates for the election are declared or otherwise publicly announced by an entity authorised under the relevant electoral legislation (Subdivision 30-DA of the ITAA 1997). The assessability of donations in the hands of the candidate is not characterised by the deductibility in the hands of the donor, for example, if an individual donates $5000 to an independent candidate they can only claim a deduction for $1500 - but the full amount will be assessable to the candidate if they have claimed deductions under 25-60 of the ITAA 1997 for election expenses in excess of that amount. This subject is addressed in Taxation Ruling 1999/10 (TR1999/10 ) Income tax and fringe benefits tax: Members of Parliament - allowances, reimbursements, donations and gifts, benefits, deductions and recoupments. Where Taxation Ruling 1999/10 (TR1999/10) uses the term Member, you cannot take this term to include yourself for taxation purposes because you were not elected as a Member of Parliament. Since you were not elected you did not commence the "business" of representing the electors and hence this did not become a work activity in your case. Therefore it is not necessary to declare any gifts and donations as assessable income as such gifts and donations are not ordinary income according to ordinary concepts. This follows as the income is not from activities conducted during the federal election, as you were not elected and hence are not a 'Member" as defined in TR 1999/10. | Detailed Reasoning - Assessable Recoupment: In your application you have argued that these gifts and donations could be regarded as assessable recoupments. Under subsection 20-25(2) ITAA 1997, if another entity pays an amount for you in respect of a loss or outgoing that you incur, you are taken to receive the amount as recoupment of the loss or outgoing. The payment made for the other services was made by another entity. However these were paid directly by them. You did not incur any amount personally for these expenses. Therefore the payment by them cannot be considered a recoupment in this situation. None of the other payments made fall into the definitions of recoupment given in subsection 20-25(1) ITAA 1997. Therefore none of the amounts will be considered assessable recoupments. Accordingly the Commissioner regards these as donations. As noted above, these donations are not ordinary income and hence are not assessable.