Taxation Determination

TD 94/50

Income tax: are legal fees and other professional fees incurred in relation to the construction of an infrastructure facility able to be financed by infrastructure borrowings under section 159GZZZZA of the Income Tax Assessment Act 1936?

  • Please note that the PDF version is the authorised version of this ruling.

FOI status:

may be releasedFOI number: I 1217494

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, 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 a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. For the purposes of section 159GZZZZA, in order for expenditure to be financed by way of infrastructure borrowings, the borrowed money must be spent on the construction of one or more infrastructure facilities or related facilities.

2. Legal expenses which are directly related to the actual physical construction of the facility, such as the construction contract, and architects' and consulting engineers' fees incurred in the course of construction are considered to be expenditure incurred in the construction of an infrastructure facility and are therefore, able to be paid for using infrastructure borrowings.

3. Certain other legal and professional fees which are not considered to be expenditure spent on the construction of an infrastructure facility include:

architects' and engineers' fees that are incurred in undertaking feasibility studies, even if the project goes ahead;
costs incurred in financing construction, such as debt establishment fees, stamp duty on loan documentation, legal fees relating to the loan documentation and fees paid to investment bankers;
development fees paid to reimburse and reward work done in winning tenders;
expenditure incurred in drafting joint venture or partnership agreements; and
legal fees incurred in negotiating leases.

Commissioner of Taxation

Previously issued as Draft TD 94/D3


ATO references:
NO Public Infrastructure Unit; PIU DTD 94/D3

ISSN 1038 - 8982

Related Rulings/Determinations:

TD 94/49
TD 94/51
TD 94/52
TD 94/53
IT 2442

Subject References:
architect's fees
engineer's fees
debt establishment fees
development fees
infrastructure borrowing
legal expenses
stamp duty

Legislative References:
ITAA 159GZZZZA(3)(a)