ATO Interpretative Decision

ATO ID 2002/948 (Withdrawn)

Income Tax

• This ATO ID is withdrawn as it is no longer necessary. This issue is covered in the You and Your Shares booklet which is on the Schedule of documents containing precedential ATO views and Taxation Ruling IT 39.
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Issue

Is the taxpayer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for travel expenses incurred to attend a company Annual General Meeting (AGM)?

Decision

Yes. The taxpayer is entitled to a deduction under section 8-1 of the ITAA 1997 for travel expenses incurred to attend a company AGM.

Facts

The taxpayer has an investment portfolio that includes a shareholding in a company.

The taxpayer earns dividend income from their shareholding in the company.

The taxpayer intends to incur travel expenses to attend the AGM for the company.

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

Taxation Ruling IT 39 Expenditure incurred in servicing or managing income producing investments - application of section 51(1) considers the deductibility of expenditure incurred in servicing or managing income producing investments. IT 39 states that where expenditure is incurred in 'servicing' an investment portfolio (such as consulting with inter-state stock brokers and attending inter-state stock exchanges), the expenditure should properly be regarded as incurred in relation to the management of income producing investments and thus as having an intrinsically revenue character.

However, Taxation Ruling TR 95/33 Income tax: subsection 51(1) - relevance of subjective purpose, motive or intention in determining the deductibility of losses and outgoings provides that where it is concluded that the disproportion between the outgoing and the relevant assessable income is essentially explained by reference to the independent pursuit of some other objective (eg for private purposes), then the outgoing must be apportioned between the pursuit of assessable income and the other objective (Fletcher v. Federal Commissioner of Taxation (1991) 173 CLR 1; [1991] HCA 42; (1991) 91 ATC 4950; (1991) 22 ATR 613).

The travel expenses incurred by the taxpayer in attending the company AGM are costs incurred in servicing their investment portfolio. If the travel relates solely for the purpose of attending the AGM, the taxpayer will be entitled to a deduction under section 8-1 of the ITAA 1997 for the cost of that travel.

However, if the purpose of the travel is predominantly of a private nature (attendance at the AGM being incidental), only the expenses that relate directly to the income producing purpose will be an allowable deduction.

Amendment History

Year of income:  Year ended 30 June 2002 Year ending 30 June 2003 Year ending 30 June 2004

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

Case References:
Fletcher v. Federal Commissioner of Taxation
   (1991) 173 CLR 1
   [1991] HCA 42
   (1991) 91 ATC 4950
   (1991) 22 ATR 613

Related Public Rulings (including Determinations)
Taxation Ruling IT 39
Taxation Ruling TR 95/33

Keywords
Dividend income
Deductions & expenses
Travel expenses

Business Line:  Small Business/Individual Taxpayers

Date of publication:  1 October 2002

ISSN: 1445-2782