The Australian Taxation Office (ATO) has advised the Department of Finance and Deregulation that it intends to publish an addendum to Taxation Ruling TR 1999/10: Income Tax and fringe benefits tax: Members of Parliament – allowances, reimbursements, donations and gifts, benefits, deductions and recoupments (TR 1999/10) covering deductions for the cost of public liability insurance incurred by members of Parliament for work-related purposes.
The ATO has advised that a deduction is allowable for the cost of an insurance policy in the circumstances where a member of Parliament decides to take out public liability insurance cover for a function or meeting which is:
- directly connected to the member of Parliament’s work-related duties;
- not held in Commonwealth-funded electorate offices; and
- not purely a social function.
The decision to take out public liability insurance for the work-related event may have been made following the receipt of advice, including independent legal advice, regarding public liability insurance in relation to the event. However, the ATO has noted that such advice is not a precondition for deductibility.
The following example of the circumstances where the cost of public liability insurance would be tax deductible has been provided by the ATO:
A sitting member of Parliament has organised a stall at a community event held in a park in his electorate. The member intends to provide information on his representation of the community and provide an opportunity for the community to discuss matters with the member. The member receives advice about public liability insurance in relation to the event and decides to take out the insurance for the event.
In this circumstance the cost of the public liability insurance will be tax deductible as it directly relates to the conduct of the member’s parliamentary duties in his capacity as a member of Parliament.
The addendum to TR 1999/10 will be published on the ATO’s website (https://www.ato.gov.au/) in due course.
You are encouraged to seek specific advice from the ATO direct if you are in any doubt about your entitlement to claim deductions, including for the cost of public liability insurance.
Separately, you may be aware that the Remuneration Tribunal (the Tribunal) has recommended, in the initial report of its review of the remuneration of members of Parliament released on 15 December 2011, that the Government undertake an immediate examination of the current public liability insurance held by all Senators and Members to assess a number of factors regarding risk and cost. Implementation of the Tribunal’s recommendations is under consideration by the Government and I expect to make further announcements regarding those recommendations in due course.
Signed by the Minister on 27 February 2012
Special Minister of State