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Edited version of private ruling
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Ruling
Subject: Travel expenses
Question 1
Are you entitled to claim a deduction, in full or in part, for your travel expenses where information gained while travelling will be used for your proposed family travel website?
Answer
No.
Question 2
Are you entitled to claim a deduction, in full or in part, for your family's travel expenses where information gained while travelling will be used for your proposed family travel website?
Answer
No.
Relevant facts and circumstances
You intend to establish a family travel website which will focus on providing information about travelling for families with children.
You intend to travel to various locations and comment on your experience.
The travel expenses that will be incurred for you and your family members include airfares, accommodation and meals.
You have not yet commenced these activities.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
Summary
Family holidays are inherently recreational in character. The fact that you may use some of the information acquired for your proposed website activities is not sufficient to transform the travel expenses from being private, to income earning, in nature. Therefore, you are not entitled to a deduction for the travel expenses.
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.
There must be a sufficient connection between the outgoing and the activities directed at gaining or producing assessable income. The decision in Ronpibon Tin v. FCT (1949) 78 CLR 47; (1949) 8 ATD 431, confirms that for an outgoing to be deductible under section 8-1 of the ITAA 1997, there must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of the assessable income.
Where travel expenses are part of the necessary cost of work-related activities they are deductible expenses. However, where the main purposes of the trip is for private or domestic purposes the expenses are not deductible.
For example, in considering Case R113 84 ATC 750 (Case R113), where the taxpayer was a sales manager for an airline, the Board of Review disallowed a deduction for costs associated with overseas travel. In making this decision Member P. M. Roach made the following comment:
One can well understand the proposition that travel experience is of advantage to a salesman of tour and travel services, just as experience of drinking whiskey may be of advantage to a salesman of whisky. But it does not follow for the whisky vendor that all expenditure he incurs relating to his consumption of whisky lacks any private character. Product sampling in the course of employment cannot be the only explanation for such expenditure.
In your case, you intend to travel to various destinations with your family and record your experiences on your website.
Although there may be some incidental activities which could be of advantage to your website, we do not consider there to be a sufficient connection between your travel expenses and your proposed income-earning activities. We consider your circumstances to be similar to those in Case R113 discussed above; the fact that you will write about your experiences does not necessarily mean that the travel expenditure will lose any private character.
Family holidays are intrinsically recreational in character. Any contributions to your website will not change the private nature of the travel.
For this reason, you are not entitled to a deduction for your travel expenses, or your family's travel expenses, under section 8-1 of the ITAA 1997.