Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Hansard source

Yesterday in question time Senator Bob Brown asked me a question relating to the tax deductibility of certain advertising. I seek leave to incorporate into Hansard additional information in response to that question.

Leave granted.

The answer read as follows—

Additional information in response to Question without Notice to the Minister representing the Treasurer on Tuesday 21 June 2011 relating to the tax deductibility of advertising expenditure

The deductibility of such expenditure depends on the actual facts.

The initial question is whether there is a sufficient connection between the expenditure and the circumstances in which the taxpayer carries on a business to produce assessable income. Expenses that arose from the taxpayer's commercial activities in the course of carrying on a business to produce assessable income may be deductible, while `expenses' that arise after income has been produced or profits derived will generally not be deductible.

For example, expenses incurred solely to defeat a proposed increase in the income tax rate would ordinarily not be deductible.

Expenditure incurred to defeat the passage of legislation that would curtail income production and/or result in a loss of market share for the taxpayer will generally be deductible (FCT v Rothmans of Pall Mall (Australia) Ltd).

Expenditure to the extent that it opposes legislation that threatens the

existence of the taxpayer's business framework in some way is not

deductible (Ward and Company Ltd v. Commissioner of Taxes (NZ)).

Subscriptions and levies paid by a member to an industry body will generally be deductible. A special purpose levy would also generally be deductible if it relates to the member's assessable income earning activities.