ATO Interpretative Decision

ATO ID 2001/711 (Withdrawn)

Income Tax

Deductibility of expenses associated with receipt of a government grant
FOI status: may be released

The decision is a straightforward application of the general deduction rule in section 8-1, ITAA 1997, and is not interpretative within the meaning of PSLA 2001/8.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 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 2001

Year of income: Year ended 30 June 2001

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

Related ATO Interpretative Decisions
ATO ID 2001/710

Keywords
Deductions and expenses

Business Line: Small Business/Individual Taxpayers

Date of publication: 30 November 2001

ISSN: 1445-2782

history

	Date:	Version:
	31 July 2001	Original statement
You are here	8 May 2009	Archived

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