INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 51AB   CLUB FEES AND EXPENDITURE RELATING TO LEISURE FACILITIES  

51AB(1A)   [No application 1997/98 income year onwards]  

This section does not apply to the 1997-98 year of income or a later year of income.

Note 1:

Section 26-45 (Club expenses) of the Income Tax Assessment Act 1997 deals with the deductibility of club expenses.

Note 2:

Section 26-50 (Expenses for a leisure facility or boat) of the Income Tax Assessment Act 1997 deals with the deductibility of leisure facility and boat expenses.

51AB(1)   [Definitions]  

In this section -

"boat"
includes any vessel;

"building"
includes a part of a building;

"club"
means a company that was established, or is carried on, solely or principally for the purpose of providing facilities for the use or benefit of its members in relation to any one or more of the following, namely, drinking, dining, recreation, entertainment, amusement or sport;

"excepted facility"
, in relation to a year of income, means -

(a) a boat that, at all times during the year of income, is held for sale by the taxpayer as trading stock in the ordinary course of a business carried on by the taxpayer;

(b) a boat that, at all times during the year of income, is used, or held for use, by the taxpayer principally for any one or more of the following purposes -

(i) for the purpose of being let on hire in the ordinary course of a business of letting boats on hire carried on by the taxpayer;

(ii) for the purpose of transporting for reward members of the public, goods (including live stock) or substances in the ordinary course of a business carried on by the taxpayer;

(iii) for any other purpose in the ordinary course of a business carried on by the taxpayer if the taxpayer satisfies the Commissioner that the use of such a boat for that purpose is essential to the efficient conduct of that business;

(c) land that, at all times during the year of income, is held for sale by the taxpayer in the ordinary course of a business of selling land carried on by the taxpayer;

(d) a building or other structure that, at all times during the year of income, is held for sale by the taxpayer in the ordinary course of a business of selling such buildings or other structures carried on by the taxpayer; or

(e) land or a building or other structure that, at all times during the year of income, is used or held for use by the taxpayer principally for any one or more of the following purposes: -

(i) the derivation by the taxpayer of income in the nature of rents, lease premiums, licence fees or similar charges;

(ii) the provision for reward of facilities for holidays, or for sport, recreation or similar leisure-time pursuits, in the ordinary course of a business of providing such facilities;

(iii) the provision, for use principally by employees of the taxpayer or for the care of children of those employees or, where the taxpayer is a company, for use principally by employees of the company who are not members or directors of the company or for the care of children of those employees, of facilities for holidays or for sport, recreation or similar leisure-time pursuits;

"land"
includes land to which improvements have been made or upon which improvements have been erected;

"leisure facility"
means -

(a) a boat, other than a boat that is an excepted facility in relation to the year of income;

(b) land, other than land that is an excepted facility in relation to the year of income, used, or held for use, for or in connexion with holidays or sport, recreation or similar leisure-time pursuits; or

(c) a building or other structure, other than a building or other structure that is an excepted facility in relation to the year of income, used, or held for use, for or in connexion with holidays or sport, recreation or similar leisure-time pursuits.

51AB(2)   [Excepted facility - Commissioner's discretion where scheme, etc]  

Where, but for this subsection, a boat, land or a building or other structure would be an excepted facility in relation to the year of income as a result of any agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business that, in the opinion of the Commissioner, would not have been entered into or carried out, or would not have been entered into in the same form or carried out in the same way, if this section had not been enacted, then that boat, land or building or other structure shall be deemed not to be an excepted facility in relation to the year of income.

51AB(3)   [Application of scheme]  

This section applies to a loss or outgoing to the extent to which it is incurred by a taxpayer -

(a) to secure or maintain, for the taxpayer or any other person, membership of a club or rights to enjoy, otherwise than as a member, facilities provided by a club for the use or benefit of its members; or

(b) for or in connexion with -

(i) the acquisition of ownership of, or of rights to use, a leisure facility;

(ii) the retention of ownership of, or of rights to use, a leisure facility;

(iii) any obligation associated with ownership of, or with rights to use, a leisure facility; or

(iv) the use, operation, maintenance or repair of a leisure facility.

51AB(4)   [Loss or outgoing not deductible]  

Subject to subsections (5) and (5A), notwithstanding anything in any other provision of this Act, a loss or outgoing to which this section applies is not an allowable deduction.

51AB(5)   [Reasonable outgoing - Commissioner's discretion]  

Where -

(a) a boat, land or a building or other structure is held for sale, or used or held for use, as mentioned in the definition of ``excepted facility'' in subsection (1) at all times during part only of the year of income; and

(b) this section would, but for this subsection, prevent a loss or outgoing, or a part of a loss or outgoing, incurred by the taxpayer in relation to the boat, land or building or other structure from being an allowable deduction from the assessable income of the taxpayer of the year of income but would not prevent that loss or outgoing or that part of that loss or outgoing from so being an allowable deduction if the boat, land or building or other structure were held for sale, or used or held for use, as referred to in paragraph (a) at all times during the whole of the year of income,

the Commissioner may determine that this section shall not prevent so much of that loss or outgoing or of that part of that loss or outgoing, as the case may be, as he considers reasonable having regard to the circumstances of the case from so being an allowable deduction.

51AB(5A)   [When subsec (4) not applicable]  

The rule in subsection (4) does not apply to expenditure incurred by the provider of a fringe benefit (within the meaning of the Fringe Benefits Tax Assessment Act 1986 ), if the expenditure is in respect of the provision of the fringe benefit.

51AB(6)   [Part year ownership or rights to use]  

Where the taxpayer owned, or had rights to use, a boat, land or a building or other structure during part of the year of income and neither owned, nor had rights to use, the boat, land or building or other structure during the remainder of the year of income, this section applies in relation to the boat, land or building or other structure as if that part of the year of income were the whole of the year of income.