Can you claim a tax deduction for Foxtel subscriptions?
Earlier this year I posted a blog article on what you CAN’T claim as a tax deduction. In this article I mentioned Foxtel subscriptions. I now have a constant stream of visitors coming to my website wanting to know – are Foxtel subscriptions tax deductible? So in response to this, I have decided to do another article laying it all out on the table about what the Tax Office really thinks of Foxtel subscriptions, and what your chances are of getting the Ok tick from the ATO in the event of an audit.
Generally, how does the Tax Office view Pay TV subscriptions?
The occupational ruling for employee journalists (Taxation Ruling TR 98/14) addresses the issue of the deductibility of pay TV.
Paragraph 138 of TR 98/14 states that:
a deduction is generally not allowable under section 8-1 of the ITAA 1997 for the cost of access to pay TV, as it is not incurred in gaining assessable income and is a private expense. It is considered that even though a taxpayer may be able to use part of the information obtained in the course of their work, the benefit gained is usually remote and the proportion of the expense that relates directly to work is incidental to the private expenditure.
Although this ruling relates specifically to employee journalists, the principles contained in the ruling can be applied to other occupations. It should immediately start ringing alarm bells! If you’re going to attempt to claim Foxtel subscriptions as a tax deduction, then right off the bat you’re on the wrong side of the ATO.
When will my Pay TV subscriptions be tax deductible?
An example of where pay TV subscriptions will be tax deductible is contained in paragraph 140 of TR 98/14:
Phil is a sports writer employed by a metropolitan newspaper. Phil specialises in test cricket and provides coverage for his employer on all the test matches played in the region. Some of the matches Phil is required to cover are only screened on Pay TV and Phil subscribes to a Pay TV provider in order to compile a report on those test matches. Phil also uses his Pay TV access for private purposes. The work-related portion of Phil’s monthly access fee is an allowable deduction.
Although Phil is a journalist, the basic principles in this article are still the same and can be applied to any occupation.
Another indication of how the Tax Office treats pay TV subscriptions is contained in ATO ID 2002/484. Note that an ATO Interpretative Decision (ATO ID) does not provide precedents at law, but they do however give a general indication of how the Tax Office may view an attempt at claiming a tax deduction.
In this particular ATO ID an accountant was allowed to claim the cost of an educational channel which he used as part of his professional development hours. The channel was not part of the standard base package supplied by the pay TV operator, but was an optional add-on with an additional fee. Therefore, the accountant was only allowed to claim the additional fee he paid to have access to that particular channel. You can read more about ATO ID 2002/484 here.
How do I calculate my claim and what records do I need to keep?
If there is one thing to learn from this article, it’s that – as a work related tax deduction, pay TV subscriptions will almost never be 100 percent tax deductible. Therefore it will be necessary to split your claim between the work related portion and the private portion.
The Tax Office shows us the correct way to do this through paragraph 140 of TR 98/14:
Paragraph 140 states that the taxpayer must calculate the correct work related/private portion by keeping a diary over a period of one month to establish a normal pattern of usage.
Warning: If attempting to make this claim, you need to be looking very carefully at your intention when you subscribe to pay TV. If your intention was to watch footy with the boys, it won’t matter whether there is some legitimate work related use. The Tax Office are very strict on this – in the event of an audit they will look at the sole purpose of subscribing to pay TV. If it is private, then your TOTAL claim will be denied. Now let’s be honest folks. How many of you really sign up for pay TV just so you can watch education channels for work.
My Final Word
When you have an expense that has such a massive private element, the Tax Office are more inclined to keep a watchful eye over attempts to claim it as a tax deduction. Unless you’re a journalist, you are certainly putting yourself in the spotlight. I would not attempt to make the claim until you have submitted an application to the tax office for a private binding ruling. See my article on How to Submit a Private Ruling.
Lastly, if you’re one of the lucky taxpayers that may be eligible to claim a portion of their Foxtel subscription, it then begs the question of whether you can claim a portion of your flat screen Television…
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