Taxation Determination
TD 92/143
Income tax: is establishment expenditure incurred by a company preparatory to listing its shares on an Australian or foreign stock exchange deductible under section 8-1 of the Income Tax Assessment Act 1997?
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FOI status:
may be releasedFOI number: I 1213131|
This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953, is a public ruling for the purposes of that Part . Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, the Determination applies to transactions entered into both before and after its date of issue. [Note: This is a consolidated version of this document. Refer to the Tax Office Legal Database (http://law.ato.gov.au) to check its currency and to view the details of all changes.] |
1. No. There is insufficient connection between establishment expenses incurred by a company and the derivation of assessable income from its income producing activities for the expenses to be deductible under the first limb of section 8-1. The costs are not incidental or relevant to the operations or activities regularly carried on by a company for the production of its assessable income (Ronpibon Tin NL v FC of T (1949) 78 CLR 47).
2. Establishment expenses are not necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income under the second limb of section 8-1. The expenses do not have the character of a working expense or form part of the cost of a company's trading operations (John Fairfax & Sons Pty Ltd v FC of T (1959) 101 CLR 30).
3. Establishment expenses are outgoings on the business entity, structure or organisation or its ownership and are not deductible under section 8-1. They are outgoings of capital or of a capital nature.
Section 8-1 of the Income Tax Assessment Act 1997, to which this Determination refers, expresses the same ideas as subsection 51(1) of the Income Tax Assessment Act 1936.
Note: The Addendum to this Determination that issued on 5 May 1999 applies in relation to the 1997-98 or a later income year.
Commissioner of Taxation
20/08/92
References
ATO references:
NO Bankstown TD 1
Subject References:
deductions
stock exchange listing expenses
Legislative References:
ITAA 51(1)
ITAA 1997 8-1
Case References:
Ronpibon Tin NL v FC of T
(1949) 78 CLR 47
John Fairfax & Sons Pty Ltd v FC of T
(1959) 101 CLR 30
| Date: | Version: | Change: | |
| 20 August 1992 | Original ruling | ||
| You are here | 5 May 1999 | Consolidated ruling | Addendum |