Deductibility of internet and data access costs incurred for share investing activities

Is the taxpayer entitled to claim a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for internet and share data access costs?

Yes. The taxpayer is entitled to claim a deduction under section 8-1 of the ITAA 1997 for internet and share data access costs to the extent that these are incurred in relation to the income producing activity of share investing.

The taxpayer is a share investor and receives income from share trading and dividends. The taxpayer incurs monthly access charges to an internet share market data service as well as internet and telephone expenses involved in the daily download of share data. The taxpayer used internet access for both business and private purposes and has claimed only the business proportion of the relevant costs.

The taxpayer incurs costs in using the internet to download data from a share market service and for trading purposes. The costs are incurred in the gaining or producing of the assessable income.

Taxation Ruling TR 98/14 discusses the deductibility of Internet Access costs for employee journalists. Paragraph 95 states: '...when an employee journalist utilises the information from the Internet for the purposes of researching a story or otherwise in the course of carrying out their duties, the work-related portion of the fee paid to the Internet Service Provider is an allowable deduction.'

Furthermore, under the ruling where the internet is used for both business and private purposes the costs will need to be apportioned accordingly.

The principles in the ruling apply equally to a taxpayer carrying on operations as a share investor. Therefore, the taxpayer is entitled to claim a deduction in respect of costs incurred for the use of the internet for income producing purposes. The expenditure incurred is deductible under section 8-1 of the ITAA 1997.