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Edited version of private ruling
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Ruling
Subject: Travel
Question
Are you entitled to a deduction for upgrading your air fares?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commenced on
1 July 2010
Relevant facts
You are a resident of Australia.
You work for an overseas college.
You are required to perform your duties in countries other than Australia or the country where your college is.
Your employer pays your air fares from Australia to the country where you perform your duties and to attend a college conference.
You incur costs of upgrading your flights from economy to business class.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for 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 the course of gaining or producing assessable income, but are not allowable to the extent that they are of a capital, private or domestic nature.
A deduction is generally not allowable for the cost of travel by an employee between home and their normal workplace as it is considered to be a private expense. The cost of travel between home and work is generally incurred to put the employee in a position to perform duties of employment, rather than in the performance of those duties (see paragraph 77 of Taxation Ruling TR 95/34).
However, there are situations where it has been accepted that travel by employees from home to work is deductible. Taxation Ruling IT 2543 summarises these situations as follows:
(a) the taxpayer's home constitutes a place of employment and travel is between two places of employment or business;
(b) the taxpayer's employment can be construed as having commenced before or at the time of leaving home;
(c) the taxpayer has to transport by vehicle bulky equipment necessary for employment;
(d) the taxpayer's employment is inherently of an itinerant nature;
(e) the taxpayer is required to break his or her normal journey to perform employment duties (other than including incidental duties such as collecting newspapers, mail, for example.) on the way from home to the usual place of employment, or from the place of employment to home.
Your situation does not correspond with any of the above situations.
In your case, your employer pays your fares between your home city and the overseas city where you perform your duties and to attend a college conference. You incur the cost of upgrading your flights from economy to business class.
The cost of upgrading your airline ticket is not deductible as it is considered to be home to work travel and is a private expense.