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Draft Taxation Determination

TD 93/D149

Income tax: where invoices for the cost of goods and/or services include offset amounts of a capital nature, is the deduction under subsection 51(1) of the Income Tax Assessment Act 1936 for the cost of the goods and/or services limited to the net amount payable under the invoices?

  • Please note that the PDF version is the authorised version of this draft ruling.
    This document has been finalised by TD 93/172.

FOI status:

draft only - for comment

Preamble

Draft Taxation Determinations (TDs) represent the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO.

1. No. The total cost of the goods and services is a liability incurred for the purposes of subsection 51(1). Offsets arising from any arrangements on capital account between the parties do not operate to reduce the amount of the liability incurred.

Example

Trade creditor was advanced a capital sum by A to be repaid by offset against the cost of goods provided to A by the trade creditor over a number of years. Where the invoices for the goods specifies their total cost and the offset amount and requires the payment of a net amount a deduction for the total cost of the goods is allowable under subsection 51(1).

Commissioner of Taxation
10 June 1993

References


BO Mel

ISSN: 1038-8982

Subject References:
recurring payments
offsets
capital expenditure

Legislative References:
ITAA 51(1)


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