Edited version of private ruling

Authorisation Number: 1011740951170

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Ruling

Subject: Deductions

Question

Are you entitled to claim a deduction for the full cost of airfare incurred in relation to your overseas conference?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

You are employed as a full time university lecturer.

Your employment duties include research activities. As part of these activities you are required to attend conferences and present your research data.

You attended a two day conference in an overseas country.

You paid for a return airfare and accommodation for two nights to attend the conference.

The purpose of the trip was to attend the conference and present your research.

You visited your family while in the overseas country. You are not claiming accommodation costs for the days you visited your family.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

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. 

To be an allowable deduction, an expense that is incurred must have a sufficient connection with the production of the assessable income.

Taxation Ruling TR 98/9 deals with the deductibility of certain self-education expenses. Paragraph 111 of the ruling states:

Airfares incurred on overseas study tours or sabbatical, on work related conferences or seminars or attending an educational institution are deductible under section 8-1. They are part of the necessary cost of participating in the tour or attending the conference or seminar or the educational institution.

Paragraphs 63 to 70 of this ruling specifically address the circumstances when apportionment of the expenses is necessary because of multiple elements of intention or purpose of the expense.

The words 'to the extent to which' signify that an expense may be apportioned if it is only partly incurred to produce assessable income. In Ronpibon Tin v FC of T (1949) 78 CLR 47; 4 AITR 236 the High Court expressed the view that '... there are at least two kinds of items of expenditure that require apportionment'. These were generally: those items that are capable of dissection; and those that cannot be dissected but should be apportioned on the basis that they serve more than one object indifferently. The latter would clearly apply to an airfare purchased for both work and private purposes (Case R13 84 ATC 168; 27 CTBR (NS) Case 64).

TR 98/9 acknowledges the above but adds:

'If the main purpose of a trip is the gaining or producing of income, the existence of an incidental purpose does not affect the characterisation of the related expenses as wholly incurred in gaining assessable income.'

In your case, you were required to attend the conference to present your research data as specified by your employment requirements. It is accepted that the dominant purpose of travelling overseas was to attend the conference, and the side trip to visit your family is an incidental private purpose.

Therefore, the full cost of the return airfare associated with the conference is an allowable deduction under 8-1 of the ITAA 1997.