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ATO ID 2002 - 319 Beverage Analyst - Purchase of Wine For Tasting
ATO ID 2002 - 319 Beverage Analyst - Purchase of Wine For Tasting
ATO ID 2002/319
Income Tax
CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not
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Issue
Is the taxpayer, a food and beverage analyst, entitled to a deduction under section 8-1 of the Income Tax
Assessment Act 1997 (ITAA 1997) for expenditure incurred in purchasing wine for tasting?
Decision
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No. The taxpayer, a food and beverage analyst, is not entitled to a deduction under section 8-1 of the ITAA 1997
for expenditure incurred in purchasing wine for tasting.
Facts
The taxpayer is a food and beverage analyst whose main role is compiling new wine lists for restaurants.
To maintain their knowledge, the taxpayer purchases several cases of mixed wine for tasting and assessment at
their private residence. The taxpayer is not required by their employer to incur this expenditure although they did
arrange for the taxpayer to receive a discount price on purchase.
The taxpayer consumes approximately 1/4 of the bottle for tasting and the remainder for private use.
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 or producing assessable income except where the outgoings are of a capital, private or
domestic nature, or relate to the earning of exempt income.
In establishing a connection, it must be shown that the outgoing is relevant and incidental to the gaining of
assessable income.
In most circumstances the purchasing of wine for tasting purposes would be considered a private expense. In
some limited circumstances this expense may be characterised as an income producing expense and may be an
allowable deduction. However, there is an onus on the taxpayer to prove that such an outlay should be an
allowable deduction.
This was highlighted in Case P30 82 ATC 139; 25 CTBR (NS) 30 Case 94 when the Board of Review disallowed a
claim for the purchase of newspapers by a real estate salesman. The real estate salesman would gather
information from the daily papers to assist him in selling real estate. The salesman was however, unable to
demonstrate that his income was affected by expenditure on the newspapers. The expense retained its private
character and the deduction was not allowed.
The taxpayer is not required to incur the expense by their employer. While knowledge acquired from the wine
tastings may assist the taxpayer to carry out employment duties more efficiently, the expense is not necessarily
incurred in order to earn that income. The tasting of the wines at the taxpayer's home has the character of a
private expense. The connection is too general or tenuous to allow a deduction for any portion of the cost.
Accordingly, the taxpayer is not entitled to a deduction under section 8-1 of the ITAA 1997 for the cost incurred in
purchasing the wine.
Amendment History
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Legislative References:
Income Tax Assessment Act 1997
section 8-1
Case References:
Case P30 / Case 94
82 ATC 139
25 CTBR (NS) 30
Keywords
Work related expenses
Private or domestic expenses
ISSN: 1445-2782
history
Date: Version:
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