Private ruling: Travel expense
Date of advice: 29 June 2015
Published: June 2015
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a deduction for the cost of a return airfare for your spouse, so that your spouse could accompany you as a carer to work related conferences? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1. | Income Tax Assessment Act 1997 Section 26-30. | Income Tax Assessment Act 1997 Subsection 26-30(1). | Income Tax Assessment Act 1997 Subsection 26-30(2).

Reasons for decision: Summary: As your spouse did not perform any substantial work-related duties as an employee of the organisation you work for or as your employee, a deduction for your spouse's return airfare costs is precluded by the operation of section 26-30 of the Income Tax Assessment Act 1997 (ITAA 1997). Furthermore this expense is not considered to meet the deductibility requirements of section 8-1 of the ITAA 1997 as it is private in nature. | Detailed Reasoning - Detailed reasoning: 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. Generally, expenses directly related to the taxpayer's personal circumstances (their health) are characterised as being private or domestic in nature. Therefore, the cost of employing a carer or similar service such as home help by a taxpayer is not deductible under section 8-1 of the ITAA 1997. Also, subsection 26-30(1) of the ITAA 1997 states that you cannot claim expenses attributable to your relative's travel, if: • you travelled in the course of performing your work duties, or in the course of carrying on a business for the purpose of gaining assessable income, and • your relative accompanied you while you travelled. Subsection 26-30(2) of the ITAA 1997 however, states that a deduction or loss could be claimed if the relative performed substantial work duties as your employee or an employee of your employer, and that it would be reasonable to conclude your relative would have accompanied you even if there was not a personal relationship with you. In Case P31 82 ATC 141 the taxpayer, a quadriplegic, was denied a deduction for expenses incurred for an attendant accompanying him on a trip. It was held that the expenditure for the attendant related to the taxpayer's medical condition rather than to the trip undertaken in the course of his employment. The essential characteristic of the outgoing was of a private nature and the expenditure on carer services was not incurred in the course of gaining or producing assessable income. In Frisch v. Commissioner of Taxation [2008] AATA 462; 2008 ATC 10-031; 72 ATR 551 ( Frisch's case ), the taxpayer employed and paid an assistant to type, write notes and memos, to retrieve, move and open files, to photocopy documents as well as provide some personal care. The AAT held that the portion of the expenditure that related to the non-personal services was an expense incurred in order to enable the taxpayer to carry out her duties and incurred in the derivation of the relevant income. However, the AAT also concluded that the portion of the expenditure that related to the provision of personal care was not deductible as it was private in nature. The AAT went on to say that an expense to overcome a physical disability in most cases would probably be non-deductible as private or domestic. The AAT elaborated by saying that a service only required and provided at work may be an exception but that a service required both at home and at work would be non-deductible. Your case can be contrasted to Frisch's case in that your carer is not assisting or carrying out any employment duties for you or your employer. Rather your spouse only assists you by providing for your personal care needs. While you may have not been able to attend the conferences due to difficulties of travelling without the aid of a carer, this does not necessarily mean that all expenses associated with your travel are deductible under section 8-1 of the ITAA 1997. The travel expense for your carer relates to your personal care and is therefore characterised as being private or domestic in nature. Consequently, the cost incurred for your spouse's airfare is not deductible under section 8-1 of the ITAA 1997. Furthermore, your spouse did not perform any substantial work-related duties as an employee of the organisation you work for or as your employee as required under subsection 26-30(2) of the ITAA 1997. The cost incurred for your spouse's airfare is therefore specifically prevented from being deductible by the operation of section 26-30 of the ITAA 1997.

Relevant facts: You travelled to attend work-related conferences. | You suffer from a disability. | Due to your disability you were accompanied by your spouse as a carer to attend to your personal needs during the trip. | Your spouse was not employed by, and did not perform any work-related duties for, you or your employer.