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Edited version of private ruling
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Ruling
Subject: Rental property expenses
Questions and answers:
1. Are you entitled to a deduction for the credit card transaction fee charged by the relevant authority for a land tax payment on a residential investment property?
Yes.
2. Is the deduction included in the 'Other rental deductions' section of your income tax return?
Yes.
This ruling applies for the following period:
Year ended 30 June 2011
The scheme commenced on:
1 July 2010
Relevant facts and circumstances
You are the sole owner of two investment properties.
Both properties were available for rent for the whole income year ended 30 June 2011.
The relevant authority charges a credit card transaction fee for paying your account by credit card.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Please note that all references are to the Income Tax Assessment Act 1997 (ITAA 1997) unless otherwise stated.
Section 8-1 allows you a deduction for losses and outgoings as long as they are incurred in the course of gaining or producing your assessable income. Expenses that are of a capital, private or domestic nature are not deductible.
The Rental properties 2009-10 guide (available on our website www.ato.gov.au) lists those expenses for which you can claim an immediate deduction in relation to your rental property. Bank charges are listed as one of those immediate deductions.
A deduction is allowable for debits tax, which encompasses credit card fees, to the extent it is charged on any outgoing from a bank account where the outgoing can be claimed as an allowable deduction.
The outgoing expense in this case is an allowable deduction. Accordingly, any credit card fees associated with this deductible outgoing are also allowable deductions.
The expenses can be included in the "Other rental deductions" section of your income tax return.