INCOME TAX ASSESSMENT ACT 1997 - SECT 25.65 Local government election expenses

INCOME TAX ASSESSMENT ACT 1997 - SECT 25.65

  (1)   You can deduct expenditure you incur in contesting an election for membership of a * local governing body, but you cannot deduct more than $1,000 per election. You deduct the expenditure for the income year in which you incur it.

  (2)   However, you can deduct more than the $1,000 limit if:

  (a)   you have received an amount as * recoupment of the expenditure; and

  (b)   some or all of that amount is included in your assessable income for an income year; and

  (c)   the total of your deductions for the election would be less than the $1,000 limit if you disregarded so much (the assessed recoupment ) of the expenditure as equals the amount so included in your assessable income.

In that case:

  (d)   the assessed recoupment is disregarded in applying the $1,000 limit; and

  (e)   the further amount that you can deduct because of paragraph   (d) is deducted for the income year referred to in paragraph   (b).

Example:   Chris is elected to the Bunyip Shire Council. In the 2007 - 08 income year he incurs expenditure of $1,200 in contesting the election, of which he deducts $1,000 (the limit under subsection   (1)).

  In 2008 - 09, Chris receives $360 as an assessable recoupment of the expenditure. $300 of that is included in his assessable income by section   20 - 35 (as extended by section   20 - 50).

  Because of the assessable recoupment, $300 of the expenditure is disregarded under paragraph   (2)(d) in applying the $1,000 limit. As a result, Chris's deductions are treated as being only $700, which is less than the limit. This does not affect his original deduction for 2007 - 2008, but it means he can deduct the previously undeducted $200, for 2008 - 09 (see paragraph   (2)(e)).

  This triggers a further application of section   20 - 35 (as extended by section   20 - 50) to include the remaining $60 of the assessable recoupment in Chris's assessable income for 2008 - 09. His total deductions (net of recoupment included in assessable income) come to $840, which is the same as his original expenditure (net of recoupment).

Note:   An amount you receive as recoupment of expenditure may be included in your assessable income as an assessable recoupment under Subdivision   20 - A, as ordinary income under section   6 - 5 or as statutory income under some other provision.