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Edited version of your written advice
Authorisation Number: 1012730701801
Ruling
Subject: Agistment
Question
Are you entitled to a deduction for agistment?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commenced on
1 July 2012
Relevant facts
You work as a rider.
Your duties involve riding and training your employer's animals.
You compete in events on animals owned by your employer.
Your employer pays all entry fees and also retains any prize-money or prizes you win.
You pay a weekly agistment fee to your employer to so that you can train a particular animal to use in these competitions to build up your experience and personal reputation.
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.
In Ronbipon Tin NL v Federal Commissioner of Taxation (1949) 78 CLR 47; [1949] ALR 875; (1949) 23 ALJ 139, the High Court of Australia stated that in order for expenses to be allowable as deductions, the expenses must be incidental and relevant to the gaining of the assessable income. Whether this connection exists is a question of fact to be determined by reference to all the facts of the particular case.
In your case, while we accept that your job entails riding animals, the expenses you incur for agistment are not incurred in producing your assessable income. Rather, the expense is incurred for you to be able to use a particular animal to train and use to build up your experience and personal reputation. It is considered that the expenses lack sufficient nexus to your income producing activity as a rider and trainer and are considered to be private in nature.
Consequently, you are not entitled to a deduction for agistment fees.