ATO Interpretative Decision

ATO ID 2001/615

Income Tax

Deductibility of travel insurance
FOI status: may be released
  • This document has changed over time. View its history.

Status of this decision: Decision Current
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.

Issue

Is the taxpayer entitled to a deduction for travel insurance under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

No. The taxpayer is not entitled to a deduction for travel insurance under section 8-1 of the ITAA 1997 as the expenditure is private in nature.

Facts

The taxpayer was granted an International Teaching Fellowship in Canada.

The taxpayer incurred expenses for airfares and travel insurance.

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.

Expenses such as insurance policies invariably cover items that are generally private in nature, for example illness, loss of baggage, and theft or damage to belongings.

In Case T78 [1986] AATA 318; 86 ATC 1094 the Administrative Appeals Tribunal (Tribunal) allowed a deduction to a barrister for airfares to attend a work-related course. However, the Tribunal held that his claim for travel insurance was expenditure of a private nature.

In Waters v. FC of T [2010] AATA 846; 2010 ATC 10-157 the Tribunal held that a taxpayer who had acquired travel (including medical) insurance prior to commencing work overseas was not entitled to a deduction for this expenditure. The expenditure could not be regarded as being incurred by Mr Waters 'in the course of' gaining or producing his assessable income, and was otherwise not deductible as it was an expense of a private or domestic nature.

The taxpayer is therefore not entitled to a deduction for travel insurance under section 8-1 of the ITAA 1997 as the expenditure is private in nature.

Amendment History

Date of amendment Part Comment
21 February 2014 Issue Minor punctuation error corrected
Reasons for Decision Included abbreviation
Included summary of a more recent relevant case
Relocated second sentence of second paragraph to create new paragraph
Case References Included case reference for a more recent relevant case and medium neutral reference for Case T78

Date of decision:  23 July 2001

Year of income:  Year ended 30 June 2000

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

Case References:
Case T78
   [1986] AATA 318
   86 ATC 1094

Waters v. FC of T
   [2010] AATA 846
   2010 ATC 10-157

Keywords
Overseas travel expenses

Siebel/TDMS Reference Number:  DW249228; 1-7YTB02Q

Business Line:  Small Business/Individual Taxpayers

Date of publication:  22 November 2001
Date reviewed:  13 April 2016

ISSN: 1445-2782

history
  Date: Version:
  23 July 2001 Original statement
You are here 21 February 2014 Updated statement