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Edited version of private ruling
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Ruling
Subject: Travel for spouse and child
Question
Are you entitled to a deduction for travel expenses for your spouse and child?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2010
The scheme commenced on
1 July 2009
Relevant facts
Your job requires that you travel regularly.
Your spouse and child travel with you when you travel on business.
Your spouse supports you by taking care of activities such as accommodation, transport and food among other things. Your spouse is also a sounding board for your business decision making.
Your spouse has an illness which makes it challenging to cope on her own with your small child.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Income Tax Assessment Act 1997 Section 26-30
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 or a provision prevents you from deducting it.
In Ronpibon Tin N. L v. Federal Commissioner of Taxation (1949) 78 CLR 47 Dixon J indicated that the character of the expenditure must be relevant and incidental to the gaining or producing of assessable income.
Subsection 26-30(1) of the ITAA 1997 states that you cannot claim expenses attributable to your relatives travel, if:
· you travelled in the course of performing your work duties, or in the course of carrying on a business for the purpose of gaining assessable income, and
· your relative accompanied you while you travelled.
· Subsection 26-30(2) of the ITAA 1997 however, clearly states that a deduction or loss could be claimed if the relative performed substantial work duties as your employee or an employee of your employer, and that it would be reasonable to conclude that your relative would still have accompanied you even if they did not have a personal relationship with you.
In your case, the requirement for your spouse to accompany you on the trip is to undertake minor activities such as accommodation, travel and meals. Your spouse is neither your employee nor an employee of your employer.
Therefore, the travel costs incurred for your spouse and child have insufficient connection with your income earning activities. Consequently, as the expenses are specifically denied under subsection 26-30(1) of the ITAA 1997, you are not entitled to a deduction.