Taxation Determination TD 93/211







Note: This is a consolidated version of this document. Refer to the Legal Database ( www.ato.gov.au/law ) to check its currency and to view the details of all changes. | 1. Yes. Fees charged at arm's length can be booked as assessable OB income as they constitute advisory activities in terms of subsection 121D(7) of the Income Tax Assessment Act 1936. However, an appropriate adjustment must be made for any deduction claim for employment related expenses. That is, the expenses would either constitute an exclusive OB deduction or a general OB deduction in accordance with section 121EF. | Example.: An OBU [1] makes available the services of an employee to an offshore subsidiary to assist in advising offshore clients. The OBU charges the subsidiary a fee of $5 000 based on a rate per hour, plus a success fee of $15 000. | The assessable OB income would include fee income of $20 000. | If the records of the OBU clearly identify the employment related costs of providing the advice - for example, the number of hours worked on the activity, it would be entitled to claim an exclusive OB deduction. However, if the records do not clearly identify the actual costs the OBU must treat the expense as a general OB deduction calculated in accordance with the formula in subsection 121EF(4). | Commissioner of Taxation 28/10/93 | Footnotes: Previously issued as Draft TD 93/D206


Related rulings: TD 93/214
Legislative references: ITAA 121D(7)
Subject references: Offshore banking, OBUs, advisory activity