ATO Interpretative Decision
ATO ID 2001/711
Income Tax
Deductibility of expenses associated with receipt of a government grantFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can the taxpayer claim deductions under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for expenses incurred in relation to a community project for which the taxpayer received a government grant?
Decision
Yes. Expenses incurred in relation to the community project for which the taxpayer received a government grant are deductible under section 8-1 of the ITAA 1997.
Facts
The taxpayer received a grant from a government of Australia (Commonwealth, State or Territory).
The grant is assessable income for services performed by the taxpayer as coordinator for a specific project.
The taxpayer incurred costs (i.e., travel, telephone, speaker's fees, postage, car expenses and stationery) in performing duties as coordinator for the project.
Reasons for Decision
Section 8-1 of the ITAA 1997 allows a deduction for all losses or 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.
There must be nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income.
The travel, telephone, speaker's fees, postage and stationery expenses were incurred by the taxpayer in relation to deriving assessable income from the government grant. The expenses are not outgoings of a capital, private or domestic nature, and therefore are allowable deductions under section 8-1 of the ITAA 1997.
Date of decision: 31 July 2001Year of income: Year ended 30 June 2001
Legislative References:
Income Tax Assessment Act 1997
section 8-1
ATO ID 2001/710
Keywords
Deductions and expenses
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 31 July 2001 | Original statement |
| 8 May 2009 | Archived |