Quote:
Originally Posted by ScipioAfricanus
The petroleum resource rent tax was back-dated to 1990, and I think there were amendments to the transfer pricing regime that were to give it a seven year retrospective effect (they were certainly proposed - can't recall if they were enacted).
One thing for certain looking at your example was that, within this taxing regime, resource companies had the option to deduct start up expenditure from the amount that was assessable once they derived an income from the sale of petroleum products. In the context of this debate about poker, there are some that believe any change to the law won't involve any ability for a taxpayer to use deductions to lessen the amount of tax they have to pay.
Let's get back to this issue of deducting losses:
The basic premise of deductions is found in the positive limbs of section 8(1) of the ITAA97 -
You can deduct from your assessable income any loss or outgoing to the extent that:
(a) it is incurred in gaining or producing your assessable income, or
(b) it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income.
And to be viewed in conjunction with the negative limbs of section 8(2) -
However, you cannot deduct a loss or outgoing under this section to the extent that:
(a) it is a loss or outgoing of capital, or a capital nature; or
(b) it is a loss or outgoing of a private or domestic nature; or
(c) it is incurred in relation to gaining or producing your exempt income or your non-assessable non-exempt income, or
(d) a provision of this Act prevents you from deducting it
In relation to the negative limbs, we can rule out section 8(2)(b) because poker earnings will not be of a private or domestic nature if they are legislated to be included in one's assessable income. Now barring the effect of section 8(2)(d) as they seem to relate to specific expenses that can't be or are limited deductions, it follows that any loss incurred which is "relevant and incidental" in producing poker income can be deducted.
And if we extend the reasoning out to the overall gambling picture, it will actually cost the government revenue if it decides to tax poker winnings because of the overwhelming majority that lose - people will start deducting their lotto tickets, TAB bets - if they start doing the sums and realise what they have paid out is more than what they have got back which they will, on the whole , come to that conclusion.
Last edited by bundy5; 05-30-2014 at 07:12 PM.