Private ruling: Travel, accommodation and registration
Published: October 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for travel and accommodation expenses to buy an investment property? | A1: No. | Q2: Are you entitled to a deduction for property registration expenses? | A2: No.


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 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. The courts have considered what constitutes a capital outgoing. In Sun Newspapers Ltd v. FC of T (1961) 61 CLR 337; 5 ATD 87; (1938) 1 AITR 403 Dixon J stated that: 'expenditure and outlay upon establishing, replacing and enlarging the profit yielding subject may in a general way appear to be of a nature entirely different from the continual flow of working expenses which are or ought to be supplied continually out of the returns or revenue.' The costs associated with the purchase of a rental property are generally not deductible as they form part of establishing the profit making asset. The cost incurred for travel and accommodation to purchase the property is a capital expense and is therefore not an allowable deduction. Furthermore, costs of registering the property in your name, tax and other purchase expenses are likewise, cost of establishing the profit making asset and not deductible.

Relevant facts: You travelled overseas to purchase an investment property off the plan. | You incurred costs for travel and accommodation. | You also incurred a cost for registration, tax and other expenses relating to the registration.