ATO Interpretative Decision

ATO ID 2002/957 (Withdrawn)

Income Tax

Deductions and expenses: airport lounge membership
FOI status: may be released
  • This ATO ID is withdrawn because the ATO view is considered in TD 2016/15 issued 27 July 2016.
    This document has changed over time. View its history.

Status of this decision: Decision Withdrawn 27 July 2016.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.


Is the taxpayer, an employer, entitled to an income tax deduction, under section 8-1 of the Income Tax Assessment Act 1997 ('ITAA 1997'), for the annual fees of an airport lounge membership?


Yes, the taxpayer is entitled to an income tax deduction, under section 8-1 of the ITAA 1997, for the annual fees of an airport lounge membership.


The taxpayer purchased an airport lounge membership. The airport lounge facilities are used primarily by the taxpayer's employees whilst they are on business travel. The lounge membership is made available to employees while they are on private holidays. The extent of the private use is small.

The primary function of Airport Lounge Clubs is to provide business facilities and prompt and efficient services relating to the travel of their members. Hospitality, such as food, drink and recreation, is merely incidental to the primary function of these clubs.

Reasons for Decision

Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income.

It is accepted that the fees for the airport lounge membership are incidental and relevant to the conduct of the taxpayer's business. However in some instances, even though an expense may be incidental and relevant to the production of income, there are some sections of the ITAA 1997 which may nevertheless specifically exclude some types of expenditure from deductibility.

The expense in this case may potentially be excluded from deductibility by Division 32 or section 26-45 of the ITAA 1997. Division 32 precludes a deduction for expenses which are considered to be entertainment expenses. Section 26-45 does not allow a deduction for the cost of recreational club membership.

However, the airport lounge membership does not meet the definition of an entertainment expense under Division 32. The Airport Lounge Club is also not considered to be a recreational club, and the fees are not excluded from deductibility on this basis.

Accordingly, the airport lounge annual membership fees are deductible under section 8-1 of the ITAA 1997.

Amendment History

Date of Amendment Part Comment
23 January 2015 Reasons for Decision Updated.
Legislative References Updated.

Date of decision:  2 May 2002

Year of income:  Year ending 30 June 2002

Legislative References:
Income Tax Assessment Act 1997
   section 8-1
   section 26-45
   section 32-5

Deductions & expenses
Entertainment expenses
Association & membership expenses

Business Line:  Private Groups and High Wealth Individuals

Date of publication:  2 October 2002

ISSN: 1445-2782

  Date: Version:
  2 May 2002 Original statement
  23 January 2015 Updated statement
You are here 27 July 2016 Withdrawn