Private ruling: Work related expenses
Ruling period: Year ended 30 June 2010
Date scheme commenced: 1 July 2009

Ruling: Q1: Are you entitled to a deduction for the work related portion of your pay TV subscription? | A1: 

Relevant facts and circumstances: You are an Australian resident. You are employed by a media company. Your employer requires that you have pay TV in order for you to watch shows necessary for you to do your job. Your employer does not reimburse you for the cost of your pay TV subscription. It is your responsibility to sell sponsorship and promotional rights to certain TV and film properties owned by your employer to advertisers. You need to watch certain shows in order to be able to sell them to advertisers. You believe that you cannot sell the rights to a TV show if you don't know what it's about. You also need to be able to watch shows that compete with your employer. You are only looking to deduct 50% of the subscription cost as you believe that 50% of your time watching pay TV is for work related purposes.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1.

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 incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. To be deductible under section 8-1 of ITAA 1997, a loss or outgoing must be relevant and incidental to the gaining or producing of assessable income. There must be a sufficient connection between the expense and the operations or activities which gain or produce the assessable income (refer to Federal Commissioner of Taxation v. Cooper (1991) 29 FCR 177; 91 ATC 4396; (1991) 21 ATR 1616). Taxation Ruling TR 1998/14 discusses whether a deduction is allowable for pay TV expenses by journalists. Paragraph 138 of this Ruling explains that a deduction is not generally allowable under section 8-1 of the ITAA 1997 for the cost of access to pay TV as it is not incurred in producing assessable income and is a private expense. This Ruling further states that even though a taxpayer may be able to use part of the information obtained in the course of their work, the benefit gained is usually remote and the proportion of the expense that relates to work is incidental to the private expenditure. However, it is also considered in some instances a journalist may have a requirement to access pay TV as a direct consequence of their employment. The same principles can be applied to other occupations. In your case, you have shown that there is a connection between your income earning activities and the pay TV expense. There is a direct link between the subscription expense and your employment duties which requires you to refer to and be conversant on certain TV shows in order to be able to sell sponsorship and promotional rights. The expenses associated with watching the relevant shows are necessarily incurred in performing your responsibilities and are considered income earning expenses rather than private or domestic in nature. You are only entitled to claim a portion of the pay TV subscription that is used exclusively for work purposes. If your subscription consists of channels which are not specifically related to your work, you watch shows that are not related to your work or other people in your household also access the pay TV, you have to apportion the cost between private use and the work related portion. You will need to keep a record of the pay TV viewing in your household to apportion the amount and substantiate whether the claims you make are fair and reasonable.

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