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Edited version of private advice
Authorisation Number: 1051863313098
Date of advice: 2 August 2021
Ruling
Subject: Work related expenses
Question1
Are you entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 for a club joining fee?
Answer
No.
Question2
Are you entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 for the portion of the club renewal fees which relate to your work in the year you incurred the renewal fee?
Answer
Yes.
Question 3
Are the renewal fees apportioned over a number of years?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
Late 20XX you paid a club membership fee that consisted of the joining fee and the renewal fee.
You are a representative travelling for your work.
You use the membership for your work and for private use. You travel with a laptop and/or tablet which are both used for work purposes while they are attending the airport lounge facilities.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 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.
The joining fee is a one-off payment and is not required to be paid each year and enables you to renew your membership.
The joining fee to the club is a capital expense and is not deductible under section 8-1 of the ITAA 1997.
This fee can be compared to internet or phone connection fees which are paid up front at the installation stage.
Such fees are not an allowable deduction under section 8-1 of the ITAA 1997.]
The renewal fees are deductible as they directly relate to the earning of your assessable income as a sales representative.
You use the facilities on work trips and on private trips.
The renewal fees should be apportioned between work and private use.
Expenditure is generally deductible in full under section 8-1 of the ITAA 1997 in the year that it is incurred. However, where an agreement provides for a prepayment of fees, such expenditure incurred by a taxpayer may be subject to section 82KZM of the Income Tax Assessment Act 1936 (ITAA 1936).
Section 82KZM of the ITAA 1936 applies where the expenditure is incurred a non-business taxpayer under an agreement for services or things of a similar kind which will not be completed within 13 months after the day the expenditure is incurred.
Section 82KZM of the ITAA 1936 only allows a proportion of the deduction which is available under section 8-1 of the ITAA 1997 in each year of income during which the period of the agreement runs. The section also provides a formula to ascertain the proportion of the deduction to claim in each of those years of income.
However, paragraph 82KZM(1)(b) of the ITAA 1936 has the effect of excluding expenditure of less than $1000 from the requirement to apportion.
You are entitled to a deduction for the club renewal fees under section 8-1 of the ITAA 1997.
As the renewal fees are less than $1000 they are not required to be apportioned over 4 years and can be deducted in full in the year they were incurred.