Edited version of private advice

Authorisation Number: 1052309500287

Date of advice: 8 October 2024

Ruling

Subject: Travel expenses - private and work purposes

Question 1

Are you entitled to claim a partial deduction for the self-education expenses under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) being the travel costs associated with your overseastrip?

Answer

Yes. The overseas travel costs will be required to be apportioned on a fair and reasonable basis between time spent on research and development for your current employed role and private time such as sightseeing and spending time with family.

Question 2

Are you entitled to claim a deduction for the travel insurance costs associated with your overseastrip under section 8-1 of the ITAA 1997?

Answer

No. You can't claim a deduction for travel insurance even if your travel is work-related. As travel insurance is regarded as private in nature, no deduction is allowed for the associated expense under section 8-1 of the ITAA 1997.

This ruling applies for the following period:

DD MM YY

The scheme commenced on:

DD MM YY

Relevant facts and circumstances

Since the specified date, you have been employed as a professional.

Current role and duties

•         Prepare and deliver current role.

•         As required, initiate and develop subject material and act as subject co-ordinator.

•         Supervise programs of research.

•         Conduct research, seek research funding and/or consultancies.

•         Perform administrative duties as appropriate.

•         Undertake a range of functions the majority of which relate to the subjects for your current role.

You employer confirmed that you are expected to conduct high quality original research, publish that research, maintain your expertise in your field, as well as teach and undertake broader development of your professional standing.

They also confirmed that for some years you have been conducting research. This project has yielded a number of publications so far, in conference papers, quality journal articles and is an ongoing program of work. This project is one of your ongoing research programs you are conducting as part of your employment.

Your Individual Research Plan

•         Research.

•         Focusing on many different areas that are focused on your current role.

Overseas travel

Between the specified dates, you will be taking leave. Traveling overseas to undertake some work-related study, research and professional development. You will also visit family during your trip.

Your proposed itinerary states that you intend to complete the following activities:

In line with your standard working week, you will spend about 36.25 hours per week on the work-related study, research and professional development.

You incurred the following travel expenses:

•         $XXXX - airfares

•         $XXXX - accommodation

•         $XXXX - insurance.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Issue 1

Question

Are you entitled to claim a partial deduction for the self-education expenses under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) being the travel costs associated with your overseastrip?

Summary

You are entitled to claim a partial deduction under section 8-1 of the ITAA 1997 for your overseas travel to the extent the expenses are work-related. Expenses relating to your travel such as sightseeing and spending time with family, and meals are private in nature and you cannot claim a deduction.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for 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.

It is well understood that the words 'in gaining or producing assessable income' are to be understood to mean 'in the course of' gaining or producing assessable income and do not convey the meaning of outgoings incurred 'in connection with' or 'for the purpose' of deriving assessable income (Commissioner of Taxation v Payne [2001] HCA 3 (Payne)). This means there must be a relationship, or close connection, between the expenditure and what it is that you do to produce your assessable income, or if none is produced, would be expected to produce your assessable income.

Some of the activities that you will undertake are directly related to your income-earning activities in your professional role and it will allow you to achieve outcomes associated with your individual research plan, conditions of employment and professional development.

Other activities which are not directly related to your income-earing activities will be private in nature. For example, expenses relating to your travel, such as sightseeing and spending time with family, and meals are private in nature and you cannot claim a deduction for them.

As the overseas travel was undertaken for private and work-related purposes, the travel costs for airfares and accommodation will be required to be apportioned on a fair and reasonable basis.

You will need to maintain travel records, including a diary or logbook, to enable you to calculate the appropriate apportionment (work-related versus private components) for the deduction.

Further information about self-education expenses can be found in Taxation Ruling TR 2024/3 Income tax: deductibility of self-education expenses incurred by an individual.

Issue 2

Question

Are you entitled to a deduction for the travel insurance costs associated with your overseastrip under section 8-1 of the ITAA 1997?

Summary

You can't claim a deduction for travel insurance even if your travel is work-related. As travel insurance is regarded as private in nature, no deduction is allowed for the associated expense.

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.

However, you can't claim a deduction for travel insurance even if your travel is work-related. Travel insurance expenses are inherently private in nature. This was highlighted in Case T78 86 ATC 1094 where a claim for travel insurance was found to be expenditure of a private and domestic nature and therefore not deductible. Travel insurance policies invariably cover items that are generally private in nature, for example, illness, loss of baggage and theft or damage to belongings. Therefore, no deduction is allowed under section 8-1 of the ITAA 1997.