Private ruling: Work related expenses - overseas airfare expense
Date of advice: 10 July 2018
Published: September 2018
Ruling period: Period ended 30 June 2018 | Period ending 30 June 2019 | Period ending 30 June 2020 | Period ending 30 June 2021
Date scheme commenced: 1 October 2017

Ruling: Q1: Are you entitled to a deduction for the cost of upgrading your airfares when your travel is work related? | A1: 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.

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