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INCOME TAX ASSESSMENT ACT 1997 - SECT 25.65

Local government election expenses

             (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.



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