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ATO Interpretative Decision

ATO ID 2002/424 (Withdrawn)

Income Tax
Telephone Rental Expenses - casual employee

Attention This ATO ID is withdrawn. Guidance on this issue contained in this ATO ID can be found at Claiming mobile phone, internet and home phone expenses (QC 46119).
Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision withdrawn 6 October 2017.

CautionCAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


Issue

Is a casual employee, who is contacted by telephone by their employer to advise the employee that a shift is available and to request that they perform that shift, entitled to a deduction for the cost of telephone rental under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

No. A casual employee who is contacted by telephone by their employer to advise the employee that a shift is available and to request that they perform that shift, is not entitled to a deduction for telephone rental costs under section 8-1 of the ITAA 1997 as it is not incurred in earning assessable income.

Facts

The taxpayer, a casual employee, is contacted by their employer when another employee needs to be replaced for a period of time or additional work has become available. The taxpayer is made aware of the vacancy sometimes as late as the morning of the day in question. The taxpayer is not on call and does not commence performing the duties from which assessable income is derived until arriving at their place of employment.

The taxpayer incurred telephone rental expenses so that they could be contacted by their employer.

Reasons for Decision

Section 8-1 of the 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, or relate to earning 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; (1949) 4 AITR 236; (1949) 8 ATD 431 the High Court stated that:

   'For expenditure to form an allowable deduction as an outgoing incurred in gaining or producing the assessable income 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.'

The expenditure must therefore be related to the production of assessable income and not incurred at a point too soon to be deductible (FC of T v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161).

In Case N5 81 ATC 35; (1981) 24 CTBR (NS) Case 78, the Board of Review held that rental of a telephone simply put the taxpayer in a position to be able to earn additional income (overtime), but that it was not incurred in deriving that income.

The telephone puts the taxpayer in a position to earn income, as it allows the employer to contact the taxpayer when an opportunity for employment arises. The telephone is not used as an integral part of the taxpayer's duties in gaining assessable income. The expense is rather a prerequisite to earning assessable income and the cost of the telephone rental is therefore not deductible under section 8-1 of the ITAA 1997.

Amendment History

Date of amendment Part Comment
1 August 2014 Issue Reworded to provide clarity
  Decision Reworded to provide clarity
  Facts Reworded to provide clarity
  Reasons for Decision Grammatical changes
  Keywords Amend key words
Add additional key words

Date of decision: 30 January 2002

Year of income:Year ended 30 June 2001

Legislative References:
Income Tax Assessment Act 1997
   section 8-1

Case References:
Ronpibon Tin NL Tong Kah Compound NL v. Federal Commissioner of Taxation
   78 CLR 47
   (1949) 4 AITR 236
   8 ATD 431

FC of T v. Maddalena
   45 ALJR 426
   2 ATR 541
   71 ATC 4161

Case N5 / Case 78
   81 ATC 35
   (1981) 24 CTBR (NS) 681

Keywords
Work related expenses
Telephone rental
Deductions
Point too soon

Siebel/TDMS Reference Number: DW257987; 1-5MQO79O; 1-AX95BUL

Business Line: Small Business/Individual Taxpayers

Date of publication: 12 April 2002

ISSN: 1445-2782

ATO ID 2002/424 (Withdrawn) history   Top  
   Date   Version 
   30 January 2002   Original statement   
    1 August 2014   Updated statement   
 You are here ®   6 October 2017   Withdrawn   


 


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