Edited version of private ruling

Authorisation Number: 1011652214968

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Ruling

Subject: Work related travel expenses

1. Are you entitled to a deduction for a portion of your airfare expenses incurred for your overseas trip?

Yes.

2. Are you entitled to a deduction for a portion of your accommodation expenses for your overseas trip?

Yes.

This ruling applies for the following period:

Year ended 30 June 2010

Year ended 30 June 2011

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 are an employee of an Australian school.

You and your partner visited a school overseas.

You are looking into the possibility of the school and your school becoming 'sister schools'.

You and your partner are returning overseas. Your trip is to revisit and establish a sister school relationship and further travel.

You have provided your itinerary.

Your role is now changing and you are now taking the schools curriculum over with you see how you can assist the school and also see how you can develop your curriculum to help your students more.

The relationship between your work overseas and your school curriculum has been provided.

You intend to eventually set up a system where you are able to take staff from your school to the other school to gain knowledge which can be used in their teachings at your school.

You have provided an email which supports your intention to establish a relationship between the two schools.

The teaching staff at your school are aware of the reasons behind your trip, however the wider school community is not.

The person who you are accountable to at the education department, is aware of the purpose of the first leg of your trip. In your discussions with them they do not believe that you need to obtain any special permissions from further above in the department as sister school arrangements are a common occurrence.

You have taken long service leave to undertake your trip.

You are not sure of what expenses you may be able to claim, but think possibly part of your airfares and accommodation.

Relevant legislative provisions

Section 8-1 of the Income Tax Assessment Act 1997

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our 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.

Taxation Ruling TR 95/14 examines the deductibility of certain expenses incurred by teachers. Included in the ruling are the situations where teachers incur travel expenses.

Purpose of travel

TR 95/14 provides that a deduction is allowable for the costs of travel (fares, accommodation, meals and incidentals) incurred by an employee teacher when travelling in the course of employment (for example to a conference).

Factors to be considered when determining the relevance of any trip to an employee teacher's employment include:

· the purpose of the trip

· the activities undertaken, and

· the duties of the teacher while away.

The purpose of the trip should have an educational benefit and be related to the curriculum or syllabus of the school. Although a trip may provide social and cultural benefits to the teacher these factors alone do not suffice to make the expenses in relation to the trip deductible.

You are an employee of a school who is travelling to a county to work with an orphanage and school to establish a sister school relationship with your school. Your partner is travelling with you. You are spending one week of your time in that country with the school and orphanage and a further period of time sightseeing.

It is considered that your trip has a dual purpose, firstly a work related purpose and secondly for private travel.

You do not have any supervisory duties while you are away as there are no students involved with the trip.

The following is an example from TR 95/14 which deals with sister schools and travel expenses:

Example: A school in Australia has a sister school in an overseas country. Every second year an employee teacher accompanies a group of students on a trip to visit the sister school. Attendance on the trip is open to any student of the school. Whilst on the trip, 6 of the 10 days are spent at the sister school engaging in social, classroom and sporting activities. The remaining days are spent touring the country.

TR 95/14 goes on to highlight that the trip in the example above is open to all students and is not part of the curriculum of any particular course at the school. While the students may have engaged in classroom or sporting activities, these do not form part of the curriculum of a subject studied by the students undertaking the trip. Even though the trip may provide social and cultural benefits to the students, the expenses incurred by the employee teacher in relation to the trip are not deductible.

It is considered that the first week of your travel is work related.

Your circumstances are different from those in the example above as for the work related portion of your trip you will be acting in your role as an employee of the school and developing part of the curriculum as a part of your trip.

Work related and private purposes

The Commissioners view on having both work and private purposes for a trip is that where the main purpose of the trip is the gaining or producing of income, the related expenses are fully deductible.

If, however, the gaining or producing of income was merely incidental to the private purpose any expenses incurred which are both work related and of a private nature must be apportioned accordingly.

Further to this TR 95/14 states that a deduction is not allowable for the expenses of relatives accompanying an employee teacher whilst travelling, this rule applies whether or not the accompanying relatives are fellow employees (if those employees perform no substantive duties during the trip).

Application to your circumstance

Airfares and accommodation

As you have both private and work related reasons for your travel the whole amount of your airfare is not deductible, therefore, your expense must be apportioned.

The Commissioner provides guidance on the apportionment of travel expenses in Taxation Ruling TR 98/9. Whilst the ruling discusses self education expenses the principles contained in it can be applied to travel expenses in other situations.

This ruling states that the intention or purpose in incurring an expense can be an element in determining whether the whole or part of the expense is an allowable deduction.

TR 98/9 provides that:

· if the main purpose of the travel is the gaining/production 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.

It is considered that you are undertaking travel equally for income earning purposes and private purposes. You are therefore entitled to a deduction for a 50% portion of your airfares.

In relation to your accommodation as the first week of your travel will be for work related purposes your accommodation expenses are fully deductible, and the remaining weeks of accommodation are for a private purpose and are not deducible.

As you have not provided details of any other expenses you wish to claim the following general advice is also provided.

General Advice

An employee may incur a number of expenses whilst travelling for a work related purpose.

The following is a listing of travel expenses a taxpayer may incur that are directly related to their work as an employee:

· taxi fares

· bridge and road tolls, parking fees and short-term car hire

· meal, accommodation and incidental expenses a taxpayer may incur while away overnight for work

· Actual expenses - such as any petrol, oil and repair costs -incurred to travel in a car that is owned or leased by someone else.

If substantiated such expenses may be deductible to the employee taxpayer.

Substantiation requirements:

* A travel diary is a document in which a taxpayer records the dates, places, times and duration of activities and travel.

** Written evidence is required for overseas accommodation expenses regardless of the length of the trip.

Example:

If a taxpayer fly's to Los Angeles for the sole purpose of attending a 7 day conference, but they don't record the conference in their travel record, they cannot deduct the cost of the air fare. This is so even if they have written evidence that they paid the fare (eg a receipt).