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Edited version of private ruling
Authorisation Number: 1011641884434
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Ruling
Subject: Professional membership
Question 1
Are you entitled to a deduction for the full cost of your professional subscriptions?
Answer
No.
Question 2
Are you entitled to a deduction of up to $42 for membership of each professional organisation?
Answer
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 retired professional.
You still maintain your registration to avoid and any legal or ethical problems associated with giving unpaid professional advice.
You are a member of two professional organisations.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Income Tax Assessment Act 1997 Section 25-55.
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for a loss or outgoing to the extent that it is incurred in gaining or producing assessable income except where it is of a capital, private or domestic nature.
Subscriptions to trade, business or professional associations are generally deductible under section 8-1 of the ITAA 1997 where the association's services have a direct connection with the earning of a person's assessable income.
Where a person is no longer earning assessable income in their profession and wishes to remain a member to a professional association, a deduction is not allowable under section 8-1 of the ITAA 1997.
In these situations a deduction is generally allowable under section 25-55 of the ITAA 1997. Section 25-55 of the ITAA 1997 allows a deduction for a payment for membership of a trade, business or professional association. The maximum amount that can be deducted under this section for the payments that a person makes in the income year to any one association is $42.
Therefore, if, for example, a retired person pays more than $42 to a professional association for membership, the deduction is limited to $42. If a person pays less than $42 for membership a deduction for the actual amount paid is allowable.
Taxation Ruling TR 2000/7 provides more details in relation to the deductibility of subscriptions paid by individuals to professional associations.
In your case, as you are not earning assessable income from your particular profession, a deduction is not allowable under section 8-1 of the ITAA 1997.
However you are entitled to a maximum deduction of $42 for each of the annual subscriptions made to your professional organisations under section 25-55 of the ITAA 1997.