Private ruling: Tax deductibility of certain entertainment expenses
Published: July 2012
Ruling period: 1 January 2010 to 31 December 2010
Date scheme commenced: 1 January 2010

Ruling: Q1: Will the annual seminar (as described in the relevant facts for this ruling), falls within the definition of a "seminar" under item 2.1 of the table in section 32-35 of the Income Tax Assessment Act 1997 (ITAA 1997), and none of paragraphs (a), (b), and (c) in column 3 of item 2.1 apply to override the exclusion. | A1: Yes

Relevant facts and circumstances: The taxpayer is a stand alone entity which is a member of the operating group. Annual seminar The annual seminar is organised by the operating group with the main aim to provide rigorous and informative consultation sessions and to work with the attendees in developing a tailored marketing strategy. The seminar is run for four days. The main purpose of the seminar is not to promote or advertise the business or goods or services of the operating group (or any of its members) and it is not intended that any information or discussion of matters particular to the operating group take place. Rather, the main purpose of the seminar is to develop a marketing strategy for the operating group's clients. Recreational activities are not part of the schedule for the seminar and any additional activities that attendees may wish to undertake must be taken during their own time and at their own expense.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 32-35

Reasons for decision: Summary: Yes, the annual seminar (as described in the relevant facts for this ruling), falls within the definition of a "seminar" under item 2.1 of section 32-35 of ITAA 1997, and none of paragraphs (a), (b) and (c) in column 3 of item 2.1 apply to override the exclusion. | Detailed Reasoning - Detailed reasoning: Section 32-35 of the ITAA 1997 provides an exception to s 32-5 in respect of certain seminars. However the exception does not apply if the seminar: (a) is a business meeting; or (b) its main purpose it to promote or advertise a business or its goods or services; or (c) its main purpose is to provide entertainment at, or in connection with, the seminar. Seminar is given a broad definition in subsection 32-65(1) of the ITAA 1997 and is defined to include a conference, convention, lecture, meeting (including a meeting for the presentation of awards), speech, "question and answer session", training session or educational course. Furthermore, subsection 32-65(3) states that a seminar will be a business meeting if its main purpose is for individuals who are (or will be) associated with the carrying on of a particular business to give or receive information, or discuss matters, relating to the business. | Detailed Reasoning - Annual seminar: For the purposes of section 32-35 of the ITAA 1997, the annual seminar would satisfy the definition of 'seminar' as provided in subsection 32-65(1) of the ITAA 1997 as it is a conference or convention, and includes speeches, lectures, and "question and answer sessions". The annual seminar is not considered a business meeting as the activities and services of the operating group are not discussed throughout the seminar. The main purpose is not to promote or advertise a business or to provide entertainment at, or in connection with, the seminar, but rather to provide rigorous and informative consultation sessions and to work with the attendees in developing a tailored marketing strategy. Accordingly, the annual seminar, as described in the facts to this ruling, falls within the definition of a "seminar" under item 2.1 of section 32-35 of the ITAA 1997, and none of paragraphs (a), (b), and (c) in column 3 of item 2.1 apply to override the exclusion.

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