Taxation Determination

TD 93/68

Income tax: how do the substantiation provisions apply in relation to payments made by police officers to informants?

  • Please note that the PDF version is the authorised version of this ruling.
    This document has changed over time. View its history.

FOI status:

may be releasedFOI number: I 1214703

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. Cash payments made by police officers to informants are an 'employment related expense' and therefore subject to the substantiation provisions of the Income Tax Assessment Act 1936 . These payments are also deemed to be an 'undocumentable expense' for the purposes of subsection 82KU(8). Subsection 82KU(6) sets out the type of records a taxpayer must retain if he or she wants to claim a deduction for an undocumentable expense. Unless these records are kept by a taxpayer, a deduction cannot be allowed for an undocumentable expense (See Case W124 89 ATC 975, AAT Case 5501 21 ATR 3037).

2. To satisfy the requirements of subsection 82KU(6), when a police officer makes a cash payment to an informant he or she must keep a diary or similar document in which the following details are recorded:

the amount of the payment; and
the fact that the payment was a payment for information; and
the date the payment was made.

3. In addition, each entry in the diary or similar document must:

state the date on which the entry was made and the name of the person making the entry; and
be signed by the person making the entry; and
be in the English language.

4. If a non-cash payment in the form of goods (e.g. a carton of cigarettes) or a light meal is made by a police officer to an informant, the substantiation provisions will require the officer to obtain a receipt evidencing the purchase. That receipt must satisfy the requirements of subsection 82KU(1). We would also expect that a diary entry would record the date on which the goods were provided.

Commissioner of Taxation

Previously issued as Draft TD 92/D231


ATO references:
NO AW 920159

ISSN 1038 - 8982

Related Rulings/Determinations:

TD 93/69

Subject References:
undocumentable expense

Legislative References:

Case References:
Case W124
89 ATC 975

AAT Case 5501
21 ATR 3037

TD 93/68 history
  Date: Version: Change:
You are here 15 April 1993 Original ruling  
  6 April 2011 Withdrawn