ATO Interpretative Decision
ATO ID 2006/72
Income tax
Election funding received by political parties from the Australian Electoral CommissionFOI status: may be released
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This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Is election funding received by a political party from the Australian Electoral Commission assessable income under subsection 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. Election funding received by a political party from the Australian Electoral Commission is not assessable income under subsection 6-5(1) of the ITAA 1997.
Facts
Following a federal election or by-election, the federal government, through the Australian Electoral Commission, distributes election funding where candidates or groups secure more than 4% of the total number of eligible votes in a particular electorate.
The purpose of the election funding is to assist the payment of election expenses and the amount paid is based on the number of first preference votes gained.
The election funding is paid by the Australian Electoral Commission to a candidate's political party unless the candidate is contesting the election as an independent.
Reasons for Decision
Subsection 6-5(1) of the ITAA 1997 provides that the assessable income of a taxpayer includes income according to ordinary concepts, which is called ordinary income.
Ordinary income has generally been held to include three categories, namely, income from rendering personal services, income from property and income from carrying on a business.
In addition, characteristics of ordinary income that have evolved from case law include receipts that:
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- are earned
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- are expected
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- are relied upon, and
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- have an element of periodicity, recurrence or regularity.
The election funding received by a political party does not exhibit the characteristics of ordinary income as described to such an extent as to be characterised as income according to ordinary concepts. The election funding also does not relate to, or result from the performance of any personal services rendered by the political party, nor is it income from property. While a political party may derive assessable income from investments or activities of a business nature, the election funding is not considered to be income from the proceeds of any business activity carried on by the political party.
Accordingly, the election funding received by a political party is not assessable as ordinary income under subsection 6-5(1) of the ITAA 1997. In addition we do not consider the election funding, when received by a political party, is assessable under any of the statutory income provisions of the ITAA 1997.
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 29 August 2014 | Related Public Rulings | Remove reference to withdrawn Taxation Ruling IT 2258 |
Year of income: 30 June 2002
Legislative References:
Income Tax Assessment Act 1997
subsection 6-5(1)
subdivision 20-A
Related Public Rulings (including Determinations)
Taxation Ruling TR 1999/10
ATO ID 2002/778
Keywords
Carrying on a business
Election funding
Political organisations
Parliament election expenses
Date reviewed: 19 April 2017
ISSN: 1445-2782
| Date: | Version: | |
| 15 March 2006 | Original statement | |
| You are here | 29 August 2014 | Updated statement |