Private ruling: Travel
Published: April 2014
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for travel? | A1: No.


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

Reasons for decision: Summary: Self-education expenses incurred by a taxpayer will qualify for deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) provided there is a sufficient nexus to the production of assessable income. However, if the expense is private in nature, no deduction will be allowed. There have been many cases involving the acquisition of skill and knowledge allowed by the courts. The case of FC of T v Finn (1960) 12 ADT 348; (1961) 106 CLR 60 ( Finn ) is of relevance here. The following per Dixon CJ is extracted from Finn (at CLR 65): "all the taxpayer's activities abroad were devoted to architecture and its study. He kept a written record of what he did and of the buildings he visited and studied. It is clear that he covered a great deal of architectural ground, that he concentrated upon it for seven days a week throughout his tour and that he made voluminous notes, took numbers of photographs and made many sketches and wrote up reports and records. In short there can be no question that all his available time was devoted to advancement of his knowledge of architecture and the development of his architectural equipment, outlook and skill He had determined to devote himself during his leave to the study of architecture abroad. He corresponded with architects and journals abroad and carefully planned an itinerary for architectural inspection and study." This is contrasted with your situation as your trip was a planned and organised by a wholesale travel company and visited tourist sites. You have provided no information to show that you did any more than tourist activities and immerse yourself in the experience. Case NS1999/16 of the Small Taxation Claims Tribunal involved a Traveland agent with similar travel claims to your own. At paragraph 13(e), Senior Member Block disallowed the trips taken as part of the taxpayer's annual leave stating; " The mere fact that the Applicant is a travel agent cannot entitle her to claim the cost of her holidays, simply because they are taken away from her home, whether in or out of Australia. That each and every holiday away from her home must benefit the Applicant, to some greater or lesser extent as a travel agent, is not in my view to the point; the relevant trips were taken in respect of her own holiday, and in respect of which all relevant choices were made by her; they were thus private." Case R113 84 ATC 750 involved an airline sales manager who claimed European tour travel expenses consisting of incidental and tour expenses as air travel was provided free. The European tour was being promoted to the public by the taxpayer's employer. At paragraphs 11 and 12, Senior Member Roach stated; "One can well understand the proposition that travel experience is of advantage to a salesman of tour and travel services, just as experience of drinking whisky may be of advantage to a salesman of whisky. But it does not follow for the whisky vendor that all expenditure that he incurs relating to his consumption of whisky lacks any private character. Product sampling in the course of employment cannot be the only explanation for such expenditure. So here too I am not persuaded that the expenditure was not of a private nature." The cases referred to above support your contention that there is a connection between travel and a travel agent's duties as a travel agent. All travel would make a travel agent a more informed and efficient employee. Participation in travel would allow advice to be given and to clients and other staff members gained from first-hand experience. However, the above decisions involving travel agents also make it clear that where travel is undertaken in an unstructured way in the taxpayer's own time, and at their own cost, undirected by their employer, the essential nature of the travel would bear a private stamp or character and thus come within the exclusion contained in section 8-1 of the ITAA 1997. In your case, you travelled on a set tour of different sight-seeing venues. You incurred a cost for the tour organisers, air fares and accommodation for a stop-over. Your employer did not contribute to any costs of the trip. You do not specialise in selling trips to the location. Your case is similar to those quoted above which have been disallowed as they were considered to be private in nature. Similarly, your expenses are not deductible as they are considered to be private.

You are entitled to receive a bonus from your employer when key performance indicators are reached and the national company also rewards performance based on reward points. | You undertook an overseas trip. | You do not specialise in selling trips to this location. | The trip was offered by a wholesale travel company. | The trip was offered to travel agents for familiarisation purposes.