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Edited version of your written advice
Authorisation Number: 1051378978492
Date of advice: 10 July 2018
Ruling
Subject: Work related expenses - overseas airfare expense
Question
Are you entitled to a deduction for the cost of upgrading your airfares when your travel is work related?
Answer
Yes.
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, or a provision of the ITAA 1997 prevents it.
Where airfares are part of the necessary cost of your work related activities they are deductible expenses. However, where the main purpose of the trip is for private or domestic purposes the expenses are not deductible.
Your employer pays for the economy class airfare and you will incur the costs to upgrade your ticket to a business class airfare. As your airfares are work related, there is a sufficient connection between the costs incurred to upgrade your ticket and the earning of your assessable income. Therefore you are entitled to a deduction for the costs incurred for your business upgrade.
This ruling applies for the following periods:
Period ended 30 June 2018
Period ending 30 June 2019
Period ending 30 June 2020
Period ending 30 June 2021
The scheme commences on:
1 October 2017
Relevant facts and circumstances
You are employed as a sales and marketing manager.
You regularly undertake work related travel.
You plan to travel overseas for work purposes.
Your employer will pay for economy air fares to the international destinations.
You plan to pay for your business upgrade for your international flights direct to the airline via your credit card.
You plan to complete work on your laptop during your international flight to prepare for your meetings on arrival.
Your travel is 100% business and has no private component.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1