Issue
Are costs incurred by a share investor in subscribing to an investment information service an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. Costs incurred by a share investor in subscribing to an investment information service are not an allowable deduction under section 8-1 of the ITAA 1997 as they are private in nature.
Facts
The taxpayer is a share investor. The taxpayer is not a share trader.
The taxpayer subscribes to an investment information service in order to keep informed of matters affecting the stock market. This service is general in nature and contains information that affects the market at a broad level. This service does not provide specific advice in respect of the share investor's own individual investment plan but is directed at any person with an interest in the share market.
Reasons for Decision
Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining assessable income, except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.
In determining whether a deduction for a subscription to an investment information service is allowed under section 8-1 of the ITAA 1997, it is necessary to examine the relationship between the expense incurred and the gaining of assessable income.
The taxpayer subscribed to the investment information service in order to be better informed about issues affecting the share market at a broad level.
Taxation Determination TD 95/60 states that a deduction is allowable for expenses incurred to manage an investment plan. However, the general information contained in this investment information service is not specifically tailored to the taxpayer's own investment plan but is directed at a wider audience. The relationship between the subscription to the investment information service and the management of the taxpayer's own investment plan is too remote to say that the expense was incurred in earning their assessable income from their share portfolio.
Accordingly, the taxpayer is not entitled to a deduction under section 8-1 of the ITAA 1997 for the cost of subscribing to the investment information session.