Private ruling: Airline lounge membership
Published: July 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to a deduction for the cost for the annual fees of an airport lounge membership? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1. | Income Tax Assessment Act 1997 Section 26-45. | Income Tax Assessment Act 1997 Section 32-10.

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income. It is accepted that the fees for the airport lounge membership are incidental and relevant to the conduct of your work. However in some instances, even though an expense may be incidental and relevant to the production of income, there are some sections of the ITAA 1997 which may nevertheless specifically exclude some types of expenditure from deductibility. The expense in this case may potentially be excluded from deductibility by Division 32 or section 26-45 of the ITAA 1997. Division 32 precludes a deduction for expenses which are considered to be entertainment expenses. Section 26-45 of the does not allow a deduction for the cost of recreational club membership. However, the airport lounge membership does not meet the definition of an entertainment expense under Division 32. The airport lounge club is also not considered to be a recreational club, and the fees are not excluded from deductibility on this basis. In your case you are required to travel domestically on a regular basis for your work. You use the facilities of the airline club lounge when you travel and there is no private use of these facilities. It is accepted that the fees for the airline club lounge membership are incidental and relevant to the earning of your assessable income and is therefore fully deductible under section 8-1 of the ITAA 1997.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You are an acting manager and have recently been required to travel continually between City A and City B and therefore joined an airline lounge membership. | You currently fly a return trip between the two sites each week and do not fly for any other purpose other than for business. | The lounge offers the following benefits to your work: | · Internet access that allows for connection to your laptop and therefore continuation of work systems while waiting for domestic flights' | · The ability to have informal discussions with several other members of your company that also have similar travel patterns. | · You do not use the lounge for private use.