| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1012704455616
Ruling
Subject: Travel, accommodation and registration
Question 1
Are you entitled to a deduction for travel and accommodation expenses to buy an investment property?
Answer
No.
Question 2
Are you entitled to a deduction for property registration expenses?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2014
The scheme commenced on
1 July 2013
Relevant facts
You travelled overseas to purchase an investment property off the plan.
You incurred costs for travel and accommodation.
You also incurred a cost for registration, tax and other expenses relating to the registration.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 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.
The courts have considered what constitutes a capital outgoing. In Sun Newspapers Ltd v. FC of T (1961) 61 CLR 337; 5 ATD 87; (1938) 1 AITR 403 Dixon J stated that:
'expenditure and outlay upon establishing, replacing and enlarging the profit yielding subject may in a general way appear to be of a nature entirely different from the continual flow of working expenses which are or ought to be supplied continually out of the returns or revenue.'
The costs associated with the purchase of a rental property are generally not deductible as they form part of establishing the profit making asset.
The cost incurred for travel and accommodation to purchase the property is a capital expense and is therefore not an allowable deduction. Furthermore, costs of registering the property in your name, tax and other purchase expenses are likewise, cost of establishing the profit making asset and not deductible.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
