Private ruling: Deductions - expenses incurred
Date of advice: 25 July 2022
Published: November 2022
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are the expenses incurred as a food, drink and travel writer tax deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income or necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income, except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. In establishing a connection, it must be shown that the outgoing is relevant and incidental to the gaining of assessable income. By application of section 32-5 of the ITAA 1997 you cannot claim a deduction under section 8-1 of the ITAA 1997 for a loss or outgoing in respect of entertainment as a general deduction. Section 32-10 of the ITAA 1997 outlines examples of what is not entertainment, which includes a restaurant meal of a food writer. In FC of T v. Cooper 91 ATC 4396; 21 ATR 1616, Lockhart J stated that there is a clear nexus between expenditure and derivation of income for a person that is in the business of publication of a food guide, where it comes to buying and tasting food in the course of conducting their business. In your case, certain expenses are paid for by your clients and the rest are self-funded. The expenditure on the food, drink and travel must be incurred in order to write the reviews. A deduction is allowable for the food and drinks purchased for the food and drink review and critic activities. The expenses incurred as a travel writer are also deductible if incurred in gaining or producing your business income.

Relevant facts and circumstances: You are a full-time professional food and travel writer. The majority of your income is derived from writing about food, drink and travel for a range of outlets, and it is sometimes necessary for you to visit new and established venues, at your own cost, in order to create work for publication. These include lists of the best restaurants or cafes, for which you need to create new content regularly, and the only way to do this is to regularly visit both new and established locations. Where possible you draw this material from interviews conducted on site or previous visits, but this is not always an option. When the work is commissioned in this way, there is a direct correlation between the expenditure and the finished piece. Work is commissioned through attending events, word of mouth and past publications. When the work is not specifically commissioned, your ability to continue to get work as an expert on the dining scene is predicated upon visiting new venues as they open, making it an unavoidable work expense. While on the road for travel stories, most costs are covered for you, but this is not always the case and because much of your work relies on finding "off the beaten track" gems, you sometimes incur extra costs that are not reimbursed. For example the flights, accommodation and activities are all covered, but you need to cover all food and drink expenses yourself. There are sections specifically related to each, those costs were essential to the finished piece. You incur the following expenses in relation to your work: • airfare, accommodation and tour for destinations, • meals and • alcoholic beverages. You are a member of several peak writer/media bodies.

Relevant legislative provisions: Income Tax Assessment Act section 8-1 | Income Tax Assessment Act section 32-5 | Income Tax Assessment Act section 32-10