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Edited version of your written advice

Authorisation Number: 1013000345250

Date of advice: 20 April 2016

Ruling

Subject: Overseas travel expenses

Question and answer

Are the overseas travel expenses deductible under section 8-1 of the Income Tax Assessment Act 1997?

Yes.

This ruling applies for the following period:

Year ended 30 June 2015

The scheme commences on:

1 July 2014

Relevant facts and circumstances

You run your own business as a web designer and you are involved with planning and designing digital products such as websites, apps and software.

You author designs and provide creative and editorial direction for your clients. This work includes designing digital and mobile magazines

You travelled overseas for the purpose of keeping abreast of current trends in your field of work and to obtain the inspiration for your creative work.

You wish to claim work related expenses you incurred for flights, accommodation, meals and incidentals.

You have receipts for the overseas travel expenses you incurred.

You have taken other overseas trips for private purposes in the last few years and have not claimed any expenses in regard to these trips.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (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.

A number of court decisions have determined that for an expense to be an allowable deduction:

To determine whether your expenses are deductible, the essential character of the expenditure must be considered. It is necessary to determine whether there is a sufficient nexus between the expenditure and your income-earning activities.

Taxation Ruling TR 98/9 (TR 98/9) discusses the deductibility of overseas travel expenses by an employee or a person in business and states that where a taxpayer is away from home overnight in connection with a self-education activity, accommodation and meals expenses incurred are deductible under section 8-1 of the ITAA 1997 (examples include an overseas study tour or sabbatical, a work-related conference or seminar or attending an educational institution). The expenses are part of the necessary cost of participating in the tour or attending the conference, the seminar or the educational institution. Likewise, air fares are also deductible for the same reason. It is not considered that such expenditure is of a private nature because its occasion is the taxpayer's travel away from home on income-producing activities.

TR 98/9 also includes a summary of FC of T v. Finn (1961) 106 CLR 60; (1961) 12 ATD 348 which relates to deductions in connection with an overseas study tour:

Based on the information provided, we consider that you have demonstrated that the primary purpose for your overseas travel was work related and the expenditure you wish to claim has a direct nexus to producing your assessable income.

The overseas travel expenses you incurred are deductible under section 8-1 of the ITAA 1997.

Please note that the substantiation requirements for work related expenses are contained in Division 900 of the ITAA 1997.


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