Taxation Determination TD 1999/45







This Taxation Determination is a 'public ruling' for the purposes of Part IVAAA of the Taxation Administration Act 1953 and is legally binding on the Commissioner. Taxation Rulings TR 92/1 and TR 97/16 together explain when a Determination is a public ruling and how it is legally binding on the Commissioner. | This Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20). | 1. Yes, a deduction is allowable if the essential character of the expense relates to the earning of assessable income and it is neither a capital expense or a non-deductible expense (e.g., entertainment). Where the expense exceeds $1,000, a deduction may only be allowable over a period of years. Special rules are discussed in paragraphs 3 and 4 of this Determination. | 2. The essential character of an expense is a question of fact. In determining the essential character of the expense, regard should be had to: | The rules, if any, associated with the granting of life membership may also assist in determining the character of the expense. For example, the rules may change the member's voting rights, allow them extra benefits, or require that the periodical journal or professional advice be paid for separately. | 3. If expenditure would otherwise qualify as an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 (the 1997 Act), it is necessary to consider if the expenditure is allowable in full in the year it is incurred, or over a period of years. Where the expenditure is less than $1,000, a deduction is allowable in full in the year it is paid as it falls within paragraph (a) of the definition of 'excluded expenditure' in subsection 82KZL(1) of the Income Tax Assessment Act 1936 (the 1936 Act). Where the expenditure is $1,000 or more, a deduction is allowable in accordance with section 82KZM of the 1936 Act. Section 82KZM requires the deduction to be apportioned and claimed over the period to which the expenditure relates, or 10 years, whichever is the lesser period. | 4. In calculating the deduction allowable under section 82KZM: | 5. Where a deduction is not allowable under section 8-1 of the 1997 Act, a deduction may nevertheless be allowable under section 25-55. Section 25-55 provides for a deduction up to an amount of $42 in respect of a payment made for membership of a trade, business or professional association. For example, a retired taxpayer who paid a life membership fee to a professional association would not be entitled to a deduction under section 8-1 because the expense does not relate to the earning of assessable income. A deduction of $42 would be allowable in the year that the life membership fee was paid. | 6. Sections 8-1 and 25-55 of the 1997 Act, to which this Determination refers, express the same ideas as subsections 51(1) and 73(3), respectively, of the 1936 Act. | Commissioner of Taxation 15 September 1999 | Previously issued in draft form as TD 93/D259


Legislative references: ITAA 1936 51(1) ITAA 1936 73(3) ITAA 1936 82KZL(1) ITAA 1936 82KM ITAA 1997 8-1 ITAA 1997 25-55
Subject references: advance expenses and payments association and membership expenses deductions and expenses