Draft Taxation Determination

TD 93/D153

Income tax: is a salaried trade union official who pays a compulsory weekly levy to a general fund for the election of union officials entitled to a deduction under subsection 51(1) of the Income Tax Assessment Act 1936?

• Please note that the PDF version is the authorised version of this draft ruling.
  This document has been finalised by TD 93/155.

FOI status:

Preamble

1 No. If a salaried, elected trade union official pays into a general fund for the election of union officials the expense is not incurred in gaining the official's assessable income but is incurred to assist in obtaining future employment for the official and others. We consider that this is an outgoing of capital or a private outgoing.

2 An employee must incur an outgoing in the course of earning his wages for a deduction to be allowed under subsection 51(1) of the Income Tax Assessment Act 1936. The compulsory nature of the levies is not relevant. What is important is the connection between the payment of the levy and the activities by which the assessable income of the employee is produced.

Example:

John Smith is elected as an official of the XYZ Union at a salary of $20,000 annually. His success at future elections determines the period of his employment. It is a condition of his employment that he contribute $20 each week to an election fund for the financing of present or future election campaigns of XYZ union officials generally. John Smith is not entitled to a deduction under subsection 51(1) of the ITAA for the amount contributed to the election fund.

Commissioner of Taxation
10/6/93

References

BO NOR J36/355/9

Related Rulings/Determinations:

IT 298
IT 299
IT 2331

Subject References:
compulsory levy
election expenses
levy
trade association
union official

Legislative References:
ITAA 51(1)