INCOME TAX ASSESSMENT ACT 1997
|CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION
|PART 2-5 - RULES ABOUT DEDUCTIBILITY OF PARTICULAR KINDS OF AMOUNTS
Div 25 inserted by No 121 of 1997.
You can deduct expenditure you incur in contesting an election for membership of a *local governing body, but you cannot deduct more than $1,000 per election. You deduct the expenditure for the income year in which you incur it.
However, you can deduct more than the $1,000 limit if:
(a) you have received an amount as *recoupment of the expenditure; and
(b) some or all of that amount is included in your assessable income for an income year; and
(c) the total of your deductions for the election would be less than the $1,000 limit if you disregarded so much (the assessed recoupment) of the expenditure as equals the amount so included in your assessable income.
In that case:
(d) the assessed recoupment is disregarded in applying the $1,000 limit; and
(e) the further amount that you can deduct because of paragraph (d) is deducted for the income year referred to in paragraph (b).
Chris is elected to the Bunyip Shire Council. In the 2007-08 income year he incurs expenditure of $1,200 in contesting the election, of which he deducts $1,000 (the limit under subsection (1)).
In 2008-09, Chris receives $360 as an assessable recoupment of the expenditure. $300 of that is included in his assessable income by section 20-35 (as extended by section 20-50).
Because of the assessable recoupment, $300 of the expenditure is disregarded under paragraph (2)(d) in applying the $1,000 limit. As a result, Chris's deductions are treated as being only $700, which is less than the limit. This does not affect his original deduction for 2007-2008, but it means he can deduct the previously undeducted $200, for 2008-09 (see paragraph (2)(e)).
This triggers a further application of section 20-35 (as extended by section 20-50) to include the remaining $60 of the assessable recoupment in Chris's assessable income for 2008-09. His total deductions (net of recoupment included in assessable income) come to $840, which is the same as his original expenditure (net of recoupment).
An amount you receive as recoupment of expenditure may be included in your assessable income as an assessable recoupment under Subdivision 20-A, as ordinary income under section 6-5 or as statutory income under some other provision.
S 25-65 inserted by No 101 of 2006, s 3 and Sch 2 item 660, effective 14 September 2006. For application and savings provisions see the CCH Australian Income Tax Legislation archive.