ATO Interpretative Decision

ATO ID 2002/484

Income Tax

Pay TV expenses
FOI status: may be released

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CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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, an accountant, claim a deduction under section 8-1 of the Income Tax Assessment Act 1997 for pay TV subscription fees paid to access a professional education channel?

Decision

Yes, there is a sufficient nexus between the income producing activities of the taxpayer and the content of the pay TV channel so that the subscription fee is an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997. The connection fee however, is a capital expense and not an allowable deduction. The subscription fee for the base pay TV channels is private expenditure under paragraph 8-1(2)(b) of the Income Tax Assessment Act 1997 and is not an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997.

Facts

The taxpayer is employed as an accountant and subscribes to pay TV in order to access a professional education channel. The professional education channel is a tier channel and is not included in the standard base package supplied by the pay TV operator. The professional education channel has received accreditation from the Accountant's Governing Body to deliver content that specifically meets the needs of its members and does not show any content of an entertainment nature.

The taxpayer incurs the following expenses: connection fee; subscription for base package; and additional subscription for the professional education channel.

Reasons For Decision

In order for expenditure to be deductible under section 8-1 of the Income Tax Assessment Act 1997 it must have the essential character of an outgoing incurred in gaining assessable income (Lunney v. FCT (1958) 100 CLR 478). There must be a sufficient nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income (Ronpibon Tin NL v. FCT (1949) 78 CLR 47). The expenditure must not be capital, private or domestic in nature.

The base package provided by the pay TV operators is an entertainment product and is essentially of a private or domestic nature. The subscription fee for the base product would therefore not qualify as a deduction under section 8-1 of the Income Tax Assessment Act 1997.

Any initial connection costs or one off membership fees will not be an allowable deduction as they are a capital and/or private expense (Case M53 80 ATC 357; (1980) 24 CTBR(NS) 234).

Taxation Ruling TR 1998/14 (Income tax: employee, journalists- allowances, reimbursements and work related deductions) discusses whether a deduction is allowable for Pay TV expenses by journalists. TR 1998/14 states that even though a taxpayer may be able to use part of the information obtained in the course of their work, the benefit gained is usually remote and the proportion of the expense that relates to work is incidental to the private expenditure. However it is also provided that in some instances a journalist may have a requirement to access Pay TV as a direct consequence of their employment.

The content of the education program has received accreditation from the Accountant's Governing Body and the content of the program specifically meets the needs of its member accountants. The entire channel relates to the taxpayer's work and is incidental and relevant to the taxpayer's employment as an accountant. The taxpayer will be able to claim a deduction for the additional subscription fee for access to the education channel under section 8-1 of the Income Tax Assessment Act 1997.

Date of decision:  6 July 1998

Legislative References:
Income Tax Assessment Act 1997
   section 8-1

Case References:
Lunney v. FCT
   (1958) 100 CLR 478

Ronpibon Tin NLv. FC of T
   (1949) 78 CLR 47

Case M53
   80 ATC 357

Related Public Rulings (including Determinations)
TR 98/14

Other References:
Previously Released as CDS10390

Keywords
Deductions & expenses
Continuing professional development expenses
Private or domestic expenses
Self education expenses
Work related expenses

Siebel/TDMS Reference Number:  CRS26915; 1-5CHEGQF

Business Line:  Private Groups and High Wealth Individuals

Date of publication:  30 April 2002
Date reviewed:  10 July 2014

ISSN: 1445-2782

history
  Date: Version:
You are here 6 July 1998 Original statement
  27 October 2017 Updated statement