Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-5 - RULES ABOUT DEDUCTIBILITY OF PARTICULAR KINDS OF AMOUNTS  

Division 25 - Some amounts you can deduct  

Operative provisions  

SECTION 25-65   Local government election expenses  

25-65(1)    
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.

25-65(2)    
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).

Example:

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).

Note:

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.