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?

Please note that the PDF version is the authorised consolidated version of this ruling and amending notices.

This document has changed over time. View its history.

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

ISSN 1038 - 3158

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

TD 92/143 history

	Date:	Version:	Change:
	20 August 1992	Original ruling
You are here	5 May 1999	Consolidated ruling	Addendum

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