ATO Interpretative Decision
ATO ID 2002/943 (Withdrawn)
Union Election Expenses
FOI status: may be released
||This ATO ID is withdrawn. Guidance on the issue contained in this ATO ID can be found at Election expenses (QC 31991).
||This document has changed over time. View its history.
Status of this decision: Decision withdrawn 27 October 2017.
|CAUTION: 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.
Is the taxpayer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 ('ITAA 1997') for expenses incurred in contesting an election as a paid union official?
No. The taxpayer is not entitled to a deduction under section 8-1 of the ITAA 1997 for expenses incurred in contesting an election as a paid union official.
The taxpayer is a paid union official with a fixed term of office.
At the end of the fixed term, elections are held and the taxpayer must contest the election to maintain their position.
An election was held for the taxpayer's position during the income year. In contesting that election the taxpayer incurred expenses such as stationery, printed material and postage.
Reasons for Decision
Section 8-1 of the ITAA 1997 allows a deduction for all losses or 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 determining whether union election expenses are incurred in gaining or producing assessable income it is relevant to consider the following cases:
- In FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541; travel and legal expenses incurred by a professional footballer in seeking and obtaining a contract with a different Rugby League club were disallowed. The court held that expenditure incurred in changing or securing a new employment was not 'incurred in gaining or producing' assessable income. The expenditure was incurred at a point too soon to be deductible.
- In Case S10 85 ATC 160; (1985) 28 CTBR (NS) Case 17 expenses incurred in being re-elected as an alderman of a city council were disallowed. The Board of Review found that the expenditure was incurred, not in the 'performance' of the taxpayer's duties but in 'obtaining' that appointment.
- In Case V46 88 ATC 375 a union official's claim for expenses incurred in conducting a successful re-election campaign was disallowed. The Administrative Appeals Tribunal held that the re-election costs were expenses incurred in obtaining a 'separate discrete period of employment' and were regarded as 'the cost to an employee of obtaining his employment'.
The union election expenses incurred by the taxpayer do not relate to maintaining a position because there is no continuity of office. The holding of an election represents the expiration of one term of office and the potential start of another term. Each election thus represents a break in continuity. For continuity to exist, the taxpayer would have to be guaranteed their union position without the need for an election.
The re-election expenses were incurred, not in the performance of their union duties but in obtaining a new term in office. Accordingly, a deduction is not allowable under section 8-1 of the ITAA 1997 for expenses incurred by the taxpayer in contesting an election as a paid union official.
Note: section 25-60 of the ITAA 1997 allows a deduction for expenses incurred in contesting elections for membership of the Federal or a State Parliament or the ACT or Northern Territory Legislative Assembly. Section 74A of the Income Tax Assessment Act 1936 allows a deduction for expenses incurred in contesting elections for membership of local government. However neither of these provisions extend to allow election expenses incurred in relation to union positions.
Date of decision: 7 June 2002
|Year of income:||Year ended 30 June 2000|
Income Tax Assessment Act 1997
Income Tax Assessment Act 1936
FC of T v. Maddalena
71 ATC 4161
85 ATC 160
(1985) 28 CTBR (NS) 129
18 ATR 3093
88 ATC 375
Work related expenses
Trade unions & employee associations
Siebel/TDMS Reference Number: DW443726; 1-AXH44XW
Business Line: Small Business/Individual Taxpayers
Date of publication: 30 September 2002
|ATO ID 2002/943 (Withdrawn) history