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Edited version of private ruling

Authorisation Number: 1011628419071

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Ruling

Subject: Membership fee

Are you entitled to a deduction for life membership fees?

Yes.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

You are a senior executive leading a team of over 100 staff.

You undertook a course which qualified graduates to become members of a network.

You became a member and paid annual membership fees.

You were offered life membership which was a one off cost for life. The cost was less than $1,000.

Membership provides members with opportunities for:

Membership of the Alumni Network entitles you to participate in all Network activities, to vote at the AGM and to vote for members of the Network Executive (a committee established to represent the membership).

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1936 Section 82KZM

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 allows a deduction for all losses and 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, or relate to the earning of exempt income.

Taxation Determination TD 1999/45 considers whether the cost of lifetime memberships may be allowable deductions.

TD 1999/45 provides for a full deduction of lifetime membership fees if the essential character of the expense relates to the earning of assessable income and the expense is less than $1,000. Where the fee is less than $1,000, it is excluded expenditure under subsection 82KZL(1) of the Income Tax Assessment Act 1936 (ITAA 1936) and section 82 KZM of the ITAA 1936 does not apply.

In your case, while we can see that there may be a private or capital component of the membership, the predominant purpose of the membership is for personal development as a leader. Therefore, you are entitled to a deduction for the full cost of the lifetime membership fees in the year in which you incurred the expense.

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