This Ruling, released on Wed 23.10.2013, sets out the Commissioner’s views on whether a “once only deduction” arises in calculating the taxable value of an “external expense payment fringe benefit” under s 24 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) where the expenditure associated with that fringe benefit would be subject to the loss deferral rule in subs 35-10(2) of the ITAA 1997. Division 35 is concerned with the deferral of losses from non-commercial business activities.
The Ruling says that, in the definition of “once-only deduction” in subs 136(1) and in s 24, the terms “deduction” and “allowable” refer to amounts which qualify as deductions under s 4-15 of the ITAA 1997 in the calculation of the employee’s taxable income.
The ATO says that for a “once only deduction” to arise under subs 136(1) “in relation to expenditure”, 2 conditions must be satisfied:
- the first condition: requires there is a deduction in a year of income in respect of a percentage of that expenditure; and
- the second condition: requires that in respect of any percentage of that same expenditure, no other deduction is allowable in any other year of income.
In the ATO’s view, expenditure (including an employee’s expenditure in respect of an external expense payment fringe benefit) that is hypothetically affected by the loss deferral rule in subs 35-10(2) can never satisfy the first condition, and therefore can never give rise to a “once only deduction”, for the purposes of s 24.
The Ruling applies to years of income commencing both before and after its date of issue. It was previously released as Draft TR 2013/D1.
[LTN 205, 23/10/13]