ATO Interpretative Decision

ATO ID 2001/329

Income Tax

Overseas travel expenses - airfares
FOI status: may be released
  • This ATO ID was amended to improve clarity and to remove reference to repealed section 23AG of the Income Tax Assessment Act 1936.
    This document has changed over time. View its history.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


Are airfares incurred by a taxpayer who was on a work exchange program in the United Kingdom, deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?


Yes. Expenses incurred on airfares for the taxpayer to travel to and from the United Kingdom are allowable under section 8-1 of the ITAA 1997, as they are directly connected to their existing employment duties.


The taxpayer was involved in a work exchange program with an organisation in the United Kingdom. The exchange program allowed the taxpayer to undertake similar employment duties overseas to those in their current employment in Australia.

The exchange was encouraged by the taxpayer's employer, who organised the necessary licences. Although not necessarily leading to an increase in income, the experience was beneficial to the taxpayer's career as a whole. The taxpayer continued to be paid by his Australian employer while he was undertaking the work exchange program in the United Kingdom. The taxpayer incurred the cost of airfares for travel to and from the United Kingdom.

Reasons for Decision

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 nature, private or domestic nature or relate to the earning of exempt income.

In Case V82 88 ATC 577; AAT Case 4374 (1988) 19 ATR 3552 a teacher on an exchange program to Canada was allowed a proportion of his travel costs. As the taxpayer's exchange service was part of his employment, it was not possible to find that no part of the expenditure claimed was incurred in gaining or producing the income derived directly from that exchange service. But for the fact that the income which the taxpayer derived while in Canada was exempt from Australian tax, the essential character of the whole of the expenditure claimed would be that of expenditure incurred in gaining or producing assessable income. Although, no financial advantage was gained by the taxpayer in respect to the travel, it was acknowledged by the Department of Education, that the experience in Canada would be of benefit to the taxpayer when he returned.

It was decided in that case to allow a deduction equal to 75% of the expenditure incurred, with the remaining 25% being an expense in earning the salary received while in Canada. As the Canadian income was exempt from tax in Australia, the portion of the expenditure applicable to that income was not deductible in Australia. The 75/25 apportionment was based on a reasonable estimate since no exact division of the items of expenditure was possible.

In this case, the taxpayer's participation in the work exchange program is part of his employment. There is a direct connection between the work the taxpayer does in the United Kingdom and the taxpayer's income earning activities in Australia. The essential character of the travel costs is that of expenditure incurred in order to gain or produce assessable income because the experience gained in the United Kingdom will assist the taxpayer with his existing employment duties.

The cost of the taxpayer's airfares is therefore an allowable deduction under section 8-1 of the ITAA 1997 as the expense has a direct nexus with the taxpayer's current employment in Australia.

Amendment History

Date of amendment Part Comment
6 May 2016 Facts Inserted fact from original case for clarity
Reason for Decision Inserted case name for ATR citation
Case References Inserted case name for ATR citation
6 June 2014 Facts Removal of repeated words.
Reason for Decision Amendments made to improve clarity.
Related ATO Interpretative Decisions Removal of withdrawn ATO interpretative decisions.

Date of decision:  22 June 2001

Legislative References:
Income Tax Assessment Act 1997
   section 8-1

Case References:
Case V82
   88 ATC 577

AAT Case 4374
   (1988) 19 ATR 3552

Exempt income
Work related expenses
Overseas travel expenses

Siebel/TDMS Reference Number:  DW225240; 1-7YT526M

Business Line:  Small Business/Individual Taxpayers

Date of publication:  15 September 2001

ISSN: 1445-2782

  Date: Version:
  22 June 2001 Original statement
  6 June 2014 Updated statement
You are here 6 May 2016 Updated statement