Private ruling: Deductibility of settlement costs - section 8-1 of the ITAA 1997

Ruling: Q1: Does the cash component of the settlement consideration meet the requirements to be an allowable deduction under subsection 8-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) for Company X for the year ended 30 June 2010? | A1: Yes. | Q2: Does the share component of the settlement consideration meet the requirements to be an allowable deduction under subsection 8-1(1) of ITAA 1997 for Company X for the year ended 30 June 2010? | A2: No. | Q3: If the answer to questions 1 and/or 2 above is "yes", is the settlement consideration prevented from being an allowable deduction under section 8-1 of the ITAA 1997 as being capital or of a capital nature for the purposes of subsection 8-1(2) of the ITAA 1997? | A3: No, the cash component is not prevented from being an allowable deduction under section 8-1 of the ITAA 1997. Issue 2 | Q4: If the answer to question 3 above is "yes", is the settlement consideration an allowable deduction under section 40-880 of the ITAA 1997 for the year ended 30 June 2010 and the subsequent 4 income years? As the answer to question 3 above is 'No', and the share component is not a 'loss' or 'outgoing', there is no need to rule.




Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | Subject: Deductibility of settlement costs - section 8-1 of the ITAA 1997: The rulee asked the following questions and the Commissioner has ruled on each of the specific questions.