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Edited version of private ruling
Authorisation Number: 1011632249327
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Ruling
Subject: Overseas travel expenses
1. Are you entitled to a deduction for the conference workshop fees and associated accommodation?
Yes.
2. Are you entitled to a deduction for transport and accommodation costs for attending the meeting with officials from a specific organisation?
Yes.
3. Are you entitled to a deduction for other expenses (transport, accommodation and meals) in relation to your overseas trip?
No.
4. Are you entitled to a deduction for travel insurance paid?
No.
This ruling applies for the following period
Year ended 30 June 2010
The scheme commenced on
1 July 2009
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You stated that you travelled overseas to attend a conference. You were accompanied by two members of similar organisations that you work for.
You took annual leave and you were away for approximately six weeks.
You planned your trip overseas approximately a month before your date of departure.
The conference was held for two days.
You also met officials from similar organisations overseas.
You organised your meetings with the officials of the organisations you visited before you left via email.
Your employer did not require you to travel overseas but encouraged you to go. They provided you with a letter of introduction before you left.
On your return, a newsletter was established in conjunction with one of the organisations you met with overseas. You also became involved in creating a website for your organisation as a result of the workshops you undertook during the conference.
You did not receive a travel allowance and were not reimbursed for your expenses by your employer.
You provided your travel itinerary, which forms part of this ruling.
You kept receipts for all of the expenses.
You stated that you travelled for 42 days in total and you wish to claim eight days which you believe were work activities and 21 days of which were in transit to engage in these work activities.
You undertook some private sightseeing tours and do not wish to claim a deduction for expenses incurred associated with these activities.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
These reasons for decision accompany the Notice of private ruling.
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Airfare, accommodation, transportation and meals
Summary
It is considered that your trip overseas was mainly devoted to a private purpose. Any expenses related to this trip are therefore not allowable deductions except for those expenses that are directly attributable to the earning of your assessable income.
Detailed reasoning
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.
Taxation Ruling TR 98/9 discusses the apportionment of overseas travel expenses where there is a dual purpose for the travel. Although this ruling deals with deductions of self-education expenses, the principles are the same for all cases requiring apportionment and could equally apply to travel expenses associated with employment.
TR 98/9 provides that:
· if the main purpose of the travel is the gaining/producing of income, the existence of an incidental private purpose does not prevent the expenses from being fully deductible
· if the travel was mainly devoted to a private purpose, such as a holiday, and the gaining/producing of income was merely incidental to the private purpose, only those expenses directly related to the income earning purpose will be deductible
· if the travel was undertaken equally for income-earning purposes and for private purposes the expenses would be apportioned equally.
An example in relation to the second point is provided in paragraph 69 of TR 98/9. In that example a doctor was holidaying in Cairns when she became aware of a work-related seminar. The cost of the half day seminar was $200. A deduction is allowable for the seminar because it is directly attributable to an income-earning purpose. However, no part of the airfare to Cairns or her accommodation is an allowable deduction.
In the Board of Review Case R47 84 ATC 380; (1984) 27 CTBR (NS) Case 101 (Case R47), the taxpayer, a French language teacher, claimed a deduction for part of the expenses in travelling to France. The trip was not undertaken at the request of the taxpayer's employer. She asserted that the trip increased her teaching skills.
The Board of Review stated that the fact that the taxpayer became a better teacher because of the trip did not mean that expenses were incurred in the course of gaining her assessable income as a teacher. The expenditure was incurred in relation to a period during which the taxpayer was without obligation to render service to her employer. Notwithstanding that her experience would be of value when she resumed performing the duties of her employment, the essentially recreational nature of the journey did not alter.
In your case, you travelled overseas to attend a two-day conference. On your travels, you met with officials from similar organisations you work for which you have organised before you left Australia. You also undertook research on the facilities and services that are available in those places.
It is considered that your circumstances are similar to those in Board of Review Case R47 as although your meetings overseas were encouraged by way of the letter of introduction produced by your employer, you were of no obligation to render your services to your employer before making your travel arrangements. In addition to this, the fact that you were on annual leave and your employer did not provide you with a travel allowance carry more weight towards the private purpose of your trip.
The overall purpose of your trip was essentially private in nature. The researches you have undertaken are seen as being merely incidental to this main purpose. The facilities you inspected are conveniently located in these places.
It is acknowledged that the trip may have enhanced your knowledge by undertaking research on the facilities of community transport overseas and the services each provide, however the courts have held that this reason alone is not enough to demonstrate a sufficient connection between the travel and the income-producing activities.
It is considered that there is not a sufficient connection between your travel expenses and your income-earning activities. Accordingly, the costs you incurred for your international return airfare, transport cost to and from, and within the countries you visited, accommodation, transfers and taxi fares to and from the airport, and meals are not deductible(except for some costs which are discussed below).The activities in various places are considered to be largely private and recreational in nature. Any work related benefits gained on such activities do not change the essential nature of the expenses. Therefore the associated costs are not an allowable deduction.
As with the example mentioned previously, a deduction is allowable for those expenses that are directly attributable to an income-earning purpose. As it is considered that your overseas trip was merely incidental to the main private purpose, only the expenses which relate to the income-earning purpose are allowable deductions. Consequently, you are entitled to claim the following expenses as allowable deductions if the substantiation requirements are met:
· costs directly associated with attending the workshop and accommodation
· taxi fares to and from meeting with one specific organisation and associated accommodation.
Travel insurance
In Case T78 86 ATC 1094 the Administrative Appeals Tribunal allowed a deduction to a barrister for airfares to attend a work-related course. However, his claim for travel insurance was found to be expenditure of a private and domestic nature and therefore not deductible. Travel insurance policies invariably cover items that are generally private in nature, for example illness, loss of baggage and theft or damage to belongings.
Therefore it is considered that the expenses incurred on your travel insurance are not deductible.