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ATO Interpretative Decision

ATO ID 2002/608 (Withdrawn)

Income Tax
Deductions & Expenses - overseas sportsperson

Attention This ATO ID is withdrawn. The view expressed in this ATO ID is current and represents a straight application of the law in relation to the non-deductibility of expenditure incurred by a related party.
Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision withdrawn 27 October 2017.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 deduction allowed under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for a proportion of the expenses incurred by the taxpayer's overseas based administration company?

Decision

No. A deduction is not allowed under section 8-1 of the ITAA 1997.

Facts

The taxpayer, an individual, is a resident of an overseas country. An administration company has been established in the taxpayer's country of residence through which all the taxpayer's worldwide earnings and expenses are disclosed.

As a result of having competed in Australia, income was derived in the taxpayer's own name. This income having been earnt in Australia is subject to tax in Australia. Against this income the taxpayer sought to claim a proportion of the indirect expenses incurred in operating the overseas administration company.

Reasons for Decision

Expenses incurred in gaining or producing assessable income or necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income are allowable deductions except to the extent that they are capital, private or domestic in nature (section 8-1 of the ITAA 1997).

The indirect expenses claimed were incurred by the administration company in running the company. They were not incurred by the taxpayer as a result of competing in sporting events in Australia. The administration company is a separate legal entity from the taxpayer for Australian income tax purposes.

Expenses incurred by the administration company are not allowable deductions against the income earnt by the taxpayer as an individual in Australia.

Therefore no deduction is allowable.

Date of decision: 24 December 2001

Year of income:Year ended 30 June 2000

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

Keywords
Overseas tax administrations
Administration expenses
Sportspersons

Siebel/TDMS Reference Number: DW262691; 1-CA2N4S3

Business Line: Small Business/Individual Taxpayers

Date of publication: 31 May 2002

ISSN: 1445-2782

ATO ID 2002/608 (Withdrawn) history   Top  
   Date   Version 
   24 December 2001   Original statement   
 You are here ®  27 October 2017   Withdrawn   


 


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