Private ruling: Travel expenses
Published: May 2015
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you entitled to a deduction for any expenses incurred in relation to your overseas trip? | A1: No.

Relevant facts and circumstances: You work for a multinational that has subsidiaries around the world. You are taking leave from your work with the Australian subsidiary to travel overseas for a few weeks to visit another subsidiary. While overseas you will study potential new positions, create meetings with responsible personnel to ensure job knowledge requirements and potential employment and evaluate and confirm requirements for the new environment due to a new position (for example, working visas, schools, accommodation, transport, and cultural orientation). The Australian subsidiary has not provided you with any monetary support for the trip.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: 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. Taxation Ruling TR 98/9 states self-education expenses are allowable as a deduction if your current income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of the self-education enables you to maintain or improve that skill or knowledge. A deduction for self-education expenses will not be allowable if the study is to enable the taxpayer to gain employment or open up a new income earning activity ( Federal Commissioner of Taxation v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161). This is because the expenses are seen to be incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. In your case, you will travel overseas and visit another subsidiary's office to study potential positions and meet with personnel to ensure job knowledge requirements and potential employment. While the trip may provide some benefit to your current income earning activities with the Australian subsidiary, it is considered that the primary purpose of the trip is to allow you to obtain a new position with the overseas subsidiary. Therefore, you are not entitled to a deduction for any expenses in relation to your trip under section 8-1 of the ITAA 1997 as the expenses are considered to be incurred at a point too soon.