Edited version of private advice

Authorisation Number: 1052114640612

Date of advice: 5 May 2023

Ruling

Subject: Election expenses

Question 1

Are you entitled to a deduction under section 25-60 of the Income Tax Assessment Act 1997 (ITAA 1997) for the expenditure you incurred in contesting the Federal election apart from entertainment expenses excluded under section 25-70 of the ITAA 1997?

Answer

Yes.

Question 2

Are you entitled to a deduction limited to $1,000 for the amount you contributed to your local government election fund under section 25-65 of the ITAA 1997?

Answer

Yes.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

1July 20XX

Relevant facts and circumstances

In the first half of the year ending 30 June 20XX, you contested a Local Councillor election. You made a $X,XXX contribution into your campaign account to cover election expenses.

Later that income year, you contested a seat in an Australian Federal election as a candidate. You were endorsed by your party as the candidate for the seat you contested. You incurred expenses during the campaign in contesting the election.

Relevant legislative provisions

Income Tax Assessment Act 1997 paragraph 25-60

Income Tax Assessment Act 1997 paragraph 25-60(1)(a)

Income Tax Assessment Act 1997 section 25-70

Income Tax Assessment Act 1997 section 25-65

Reasons for decision

Question 1

Are you entitled to a deduction under section 25-60 of the Income Tax Assessment Act 1997 (ITAA 1997) for the expenditure you incurred in contesting the Federal election apart from entertainment expenses excluded under section 25-70 of the ITAA 1997?

Answer

Yes.

Detailed reasoning

Paragraph 25-60(1)(a) of the ITAA 1997 allows you to deduct expenditure you incur in contesting an election for membership of the Parliament of the Commonwealth.

Unlike the general deduction provisions of section 8-1 of the ITAA 1997, section 25-60 of the ITAA 1997 does not specifically state that the loss or outgoing must be incurred in gaining or producing your assessable income. However, for a deduction to be allowable the expenditure must be 'incurred in contesting an election' and it must be of a type that a Member would incur to further his or her chances of being elected to a Parliament.

Paragraphs 158 to 173 of Taxation Ruling TR 1999/10 Income tax and fringe benefits tax: Members of parliament- allowances, reimbursements, donations and gifts, benefits, deductions and recoupments contain the Commissioner's view on election expenses.

Section 25-70 pf the ITAA 1997 limits the deductions that a candidate can claim in relation to the provision of entertainment. These expenses are only deductible to the extent to which the candidate incurs them in respect of the provision of entertainment that is available to the public generally, or food or drink to the candidate while travelling overnight in the course of the campaign, unless that food or drink expense is incurred in the course of entertaining another person. Paragraph 179 of TR 1999/10 provides an example of expenses that are related to the public in general and states:

'179. Example: A Member provides light refreshments such as tea, coffee, fruit drinks, cakes and biscuits to constituents when they visit her electorate office. A deduction is allowable for the cost of providing these refreshments to the constituents because we do not consider that this amounts to the provision of entertainment, and the expenditure satisfies the general deduction tests.'

In your case, the expenses incurred (other than those entertainment expenses excluded by section 25-70 of the ITAA 1997) are deductible as they were expenses incurred in contesting an election for membership of the Parliament of the Commonwealth. You were endorsed by your party as the candidate for the seat you contested and the expenses incurred for printing of campaign materials, outdoor and digital advertising, campaign Management fee, logistics expenses and buying and printing of campaign T-shirts are of a type that would further your chances of being elected to Parliament.

Question 2

Are you entitled to a deduction for the amount you contributed to your local government election fund of up to $1,000 under section 25-65 of the ITAA 1997?

Answer

Yes

Detailed reasoning

Section 25-65 of the ITAA 1997 allows a deduction for expenditure you incur in contesting an election for membership of a local governing body for up to $1,000. You deduct the expenditure of the income year in which you incur it.

You contested a Local Councillor election. You made a $X,XXX contribution to your election campaign fund to cover election expenses. You are entitled to a deduction for up to $1,000 for this expense under section 25-65 of the ITAA 1997 in the financial year you incurred the expense.

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