Edited version of your written advice

Authorisation Number: 1012672711158

Ruling

Subject: Travel

Question

Are you entitled to a deduction for travel, accommodation, meals and incidentals?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2015

The scheme commenced on

1 July 2014

Relevant facts

You are an employee.

You are taking a sabbatical in which you intend conducting research with industry and universities overseas.

You also plan to participate in conferences in a number of countries.

During your sabbatical, your employer will pay your salary in full and will also provide you with credit card for travel and some conferences.

Your travel and conference costs will be more than the amount your employer allows you on the credit card and you wish to claim the excess.

Your spouse will travel with you overseas.

You will travel to a large number of cities overseas staying only long enough in each to conduct your research.

You will undertake some personal holidays during your trip and you will not claim a deduction for expenses relating to this period.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Section 26-30

Income Tax Assessment Act 1997 Section 900-50

Reasons for decision

Summary

You are entitled to a deduction for travel, accommodation, meals, incidentals and conference registrations. However, expenses that relate to both you and your spouse must be apportioned in a fair and reasonable manner.

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.

Expenditure on travel, accommodation and meals ordinarily has the character of a private or domestic expense. However, the occasion of the outgoing may operate to give the expenditure the essential character of an income-producing expense. Paragraph 89 of TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business elaborates: 

Where a taxpayer is away from home overnight in connection with a self-education activity, accommodation and meals expenses incurred are deductible under section 8-1. (Examples include an overseas study tour or sabbatical, a work-related conference or seminar or attending an educational institution.) They are part of the necessary cost of participating in the tour or attending the conference, the seminar or the educational institution. We do not consider such expenditure to be of a private nature because its occasion is the taxpayer's travel away from home on income-producing activities.

It is accepted that your travel is in connection with your income earning activity. Therefore, you are entitled to a deduction for your air and land travel, accommodation, meals, incidentals and conference registrations.

The deductibility of travel expenses of an accompanying relative is limited by section 26-30 of the ITAA 1997, which denies a deduction for the travel expenses of a spouse or other relative who accompanies a business traveller, where the accompanying relative is neither fellow-employee nor an employee of the business traveller.

Your spouse will be accompanying you on your trip however, they will not be working during this time.

Therefore, you are not entitled to a deduction for the portion of your travel and accommodation expenses which relate to your spouse accompanying you on the trip.

You will need to apportion any expenses, such as accommodation, which relate to both you and your spouse, as any expense relating to your spouse's travel is not a deductible expense.

As a general rule, written evidence is required to substantiate any expense you wish to claim as a deduction.

However, section 900-50 of the ITAA 1997 provides that the substantiation requirement to obtain written evidence does not apply to claims by employee taxpayers for expenses covered by a travel allowance if the amount of the claim for expenses incurred does not exceed the amount the Commissioner considers reasonable.

In your situation, you do not receive an allowance for travel or conferences that are not covered by your employer's credit card. Therefore, you are required to be able to substantiate any expense you wish to claim.