Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

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

Division 26 - Some amounts you cannot deduct, or cannot deduct in full  

Operative provisions  

SECTION 26-50   Expenses for a leisure facility  

26-50(1)    

You cannot deduct under this Act a loss or outgoing to the extent you incur it:

(a) to acquire ownership of a ^* leisure facility; or

(b) to retain ownership of a leisure facility; or

(c) to acquire rights to use a leisure facility; or

(d) to retain rights to use a leisure facility; or

(e) to use, operate, maintain or repair a leisure facility; or

(f) in relation to any obligation associated with your ownership of a leisure facility; or

(g) in relation to any obligation associated with your rights to use a leisure facility.

However, there are exceptions (see subsections (3), (4) and (8)).

What is a leisure facility ?

26-50(2)    
A leisure facility is land, a building, or part of a building or other structure, that is used (or held for use) for holidays or ^* recreation.

Exception - leisure facilities

26-50(3)    
Subsection (1) does not stop you deducting a loss or outgoing for a ^* leisure facility if at all times in the income year:

(a) you hold the leisure facility for sale in the ordinary course of your business of selling leisure facilities; or

(b) you use the leisure facility (or hold it for use) mainly to provide it:

(i) in the ordinary course of your ^* business of providing leisure facilities for payment; or

(ii) to produce your assessable income in the nature of rents, lease premiums, licence fees or similar charges; or

(iii) for your employees to use; or

(iv) for the care of your employees ' *children.

In the case of a company, subparagraphs (b)(iii) and (iv) do not apply to employees who are ^* members or directors of the company.

Exception - part year use of leisure facilities

26-50(4)    
If you use a ^* leisure facility (or hold it) as described in subsection (3) at all times during part of the income year, then subsection (1) does not stop you deducting so much of the loss or outgoing as is reasonable in the circumstances.

26-50(5)    
(Repealed by No 78 of 2007 )

26-50(6)    
(Repealed by No 78 of 2007 )

Anti-avoidance - when exceptions do not apply

26-50(7)    

A ^* leisure facility is taken not to be used (or held) as described in subsection (3) if:

(a) apart from this subsection, the leisure facility would be used (or held) in that way because of a ^* scheme; and

(b) in the Commissioner's opinion, the scheme would not have been entered into or carried out if this section had not been enacted.

Exception when you provide a fringe benefit

26-50(8)    
Subsection (1) does not stop you deducting expenditure you incur in ^* providing a ^* fringe benefit.