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Edited version of private ruling
Authorisation Number: 1011882122159
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Ruling
Subject: Deduction for managing personal finances
Question
Are you entitled to a deduction for the monthly amount you pay to manage your personal finances?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts
You are an employee.
Your wage is deposited into an account managed by a company.
The company pays your bills from the funds in the account and some of the funds are transferred into another account for your weekly living expenses.
The company charges you a monthly amount to manage your funds and pay your bills.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
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.
The courts have considered the meaning of 'incurred in gaining or producing assessable income'. In Ronpibon Tin NL Tong Kah Compound NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; 56 ALR 785; 8 ATD 431 the High Court stated that:
For expenditure to form an allowable deduction as an outgoing incurred in gaining or producing assessable it must be incidental and relevant to that end. The words "incurred in gaining or producing the assessable income" mean in the course of gaining or producing such income.'
In your case, the amount you pay to the company is for managing your personal finances. It is not incurred in gaining your assessable income. The expense is of a private nature and therefore, a deduction is not allowable.