Private ruling: subscription expenses
Published: November 2011
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to a deduction for the expense incurred to subscribe to a share market information service? | A1: 

Relevant facts and circumstances: You hold an investment portfolio but are not carrying on a business. The majority of your investments yield income in the form of dividends or unit trust distributions. You are actively involved in monitoring your investment portfolio with the aim of maximising dividend and interest income. You intend to subscribe to a share market information service, which would be able to provide more current and timely information. The share market information service provides access to current company information from company annual reports, announcements, newspaper articles and financial analysis of companies. You work part time and wish to maximise dividend and unit trust distribution yields with a view to your retirement and management of your superannuation monies.

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. The Commissioner's view on the deductibility of expenses incurred due to subscriptions to share market information services and investment journals are outlined in Taxation Determination TD 2004/1. TD 2004/1 defines a share market information service to be a subscription that provides users with information and analysis on the stock listed on Australian and foreign stock exchanges. The services are usually provided via the internet and extend to, but are not limited to news articles, publication, share prices, company documents, overseas market information and broker research and analysis. Paragraphs 6 and 7 of TD 2004/1 detail that where a share market information service or investment journal is used to monitor an investment portfolio with the aim of maximising dividends or interest, the cost of subscriptions to that service or journal will be incurred in gaining or producing assessable income. A share investor is more likely to be able to show that there is sufficient nexus between the expense and the investment income where they are actively involved in managing an investment portfolio. In you case, you currently hold an investment portfolio which you are actively involved in monitoring to maximise dividend and interest income. There is a sufficient nexus between the subscription expenses and the gaining of dividend and interest income. Therefore, you are entitled to a deduction for the subscription expenses 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.