Edited version of private ruling

Authorisation Number: 1011642910919

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Ruling

Subject: travel expenses

1. Are you entitled to a deduction for expenses incurred attending a charity event?

No.

2. Are you entitled to a proportion of your travel expenses incurred in attending a work-related conference?

Yes.

This ruling applies for the following period:

Year ended 30 June 2010

Year ended 30 June 2011

The scheme commences on:

1 July 2009

Relevant facts and circumstances

You are a qualified trainer/instructor in your industry.

You are the event co-ordinator and also a participant of a charity event.

The charity event is sponsored by your employer.

You have made two trips during 2010 overseas.

First Trip

The first trip took place while you were on annual leave.

The primary purpose of the trip was to organise the charity event.

You organised the trip approximately two months prior to the trip.

You were asked by the charity event committee to attend a work-related conference whilst overseas. At the conference you were asked to speak about and promote the charity event.

You decided to attend one month prior to the trip. You would not have attended the conference had you not been involved with the charity event.

You received a letter from your employer endorsing the trip stating it will be of benefit to your professional development.

You were required by your employer to write a report on the issues discussed at the conference.

You incurred expenses in relation to internet telephone, flights, accommodation, transport and meals which were not reimbursed by your employer.

Second Trip

You returned overseas to coordinate and participate in the charity event.

You were paid your regular salary during this time and did not take any annual leave whilst participating in the event.

You were selected to participate and coordinate the charity event by submitting an application.

The charity event gave you the opportunity to network.

You incurred expenses in relation to internet telephone, flights, accommodation, transport and meals which were not reimbursed by your employer.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Summary

The expenses associated with organising and participating in the charity event are considered private expenses as your participation in the event is for a private purpose. You are entitled to a proportion of expenses incurred on your first trip overseas as the conference is considered incidental and relevant to your income earning activities.

Detailed reasoning

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, or relate to the earning of exempt income.

Taxation Ruling TR 98/9 discusses circumstances in which self-education expenses are allowable as a deduction. If a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction.

You may be entitled to a deduction for attendance at work-related conferences, seminars or training courses as self education expenses to the extent that the conference, seminar or training course is not incidental to a private activity.

Charity event

In Case V10 88 ATC 154 (Case V10) a public servant attended a sports carnival that was organised, promoted and attendance encouraged by the public servant's department. The expenses incurred were not an allowable deduction as it was predominantly a social activity of a private nature.

It is considered that your circumstances are similar to those of Case V10. It was not a requirement of your employment to attend the charity event and your attendance was not a part of your normal income earning activities.

Although a natural consequence of your attendance at the event would have been the opportunity to network, it was not incidental to your employment. 

It is considered that the dominant purpose of your attendance at the charity event was for personal reasons and therefore of a private nature. Consequently, the costs of attending the charity event are not an allowable deduction.

Trip to attend the conference and organise the charity event.

If an expense is only partly incurred to produce assessable income it may be apportioned.

Taxation Ruling TR 98/9 discusses the apportionment of overseas travel expenses where there is a dual purpose for the travel. Paragraph 65 states that:

Both Ronpibon Tin NL (78 CLR at 59) and Fletcher & Ors v. Federal Commissioner of Taxation (1991) 173 CLR 1 at 16; 91 ATC 4950 at 4957; 22 ATR 613 at 621 recognise there are at least two kinds of expenditure that require apportionment under section 8-1 of the ITAA 1997.

The first is expenditure in respect of a matter where distinct and severable parts are devoted to gaining income and other parts are devoted to some other end. If a study tour or work-related conference or seminar was mainly devoted to a private purpose, such as having a holiday, and the gaining or producing of income was merely incidental to the private purpose, only those expenses directly attributable to the income-earning purpose would be allowable.

The second kind of apportionable expenditure is a single outlay that serves both an income-earning purpose and some other purpose indifferently. While the High Court recognised that there can be no precise arithmetical division in such cases, it said there must be some fair and reasonable division on the facts of each case.

In your case, you travelled overseas primarily to organise the charity event. At the request of the charity event committee you also attended a conference. The overseas trip was organised prior to your decision to attend the conference. You would not have attended the conference had you not already have been travelling overseas.

It can be seen then that the trip was mainly devoted to a private purpose, the organisation of the charity event, and work related component of the conference was merely incidental to the private purpose.

Therefore, in accordance with TR 98/9 you are entitled to claim a deduction for the direct costs of attending the conference such as accommodation for days you attended the conference and transport to and from the venue because these costs are directly attributable to an income-earning purpose. However, no part of your air fares overseas or costs relating to the organisation of the charity event are an allowable deduction.