Private ruling: deductibility of travel expenses
Published: March 2013
Date scheme commenced: 1 July 2011

Ruling: Questions and answers: | 1. Are you entitled to a deduction for airfare and accommodation expenses? | Yes. | 2. Are you entitled to a deduction for incidentals using the reasonable travel allowance amount? | 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 (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. | Detailed Reasoning - Flights and hotels: Travel and accomodation expenses will be a deductible expense provided that they satisfy the requirements of section 8-1 of the ITAA 1997 that the expense must be directly related to the earning of your assessable income. In your case, you travelled both domestically and overseas to increase your expertise and knowledge of various sites and venues that represent future opportunities to your prospective and current clients. In doing so you have demonstrated that there is a direct link between this travel and your income earning activities. In particular the knowledge that you gain in while travelling assist you in managing your current clients when organising and managing events. In addition the travel was undertaken on work time. Therefore, you are entitled to a deduction for the cost of the travel and accommodation expenses that have been incurred when visiting these various sites and venues under section 8-1 of the ITAA 1997. Expenses incurred in relation to private activities are not deductible. | Detailed Reasoning - Reasonable travel allowance amount: Under Subdivision 900-B of the ITAA 1997, a deduction is not allowable for a work expense, including a meal allowance expense or travel allowance expense, unless the expense qualifies as a deduction under a provision of the Act and written evidence of the expense has been obtained and retained by the employee taxpayer. The cost of meals and other incidentals is normally considered to be a private expense and is not an allowable deduction under section 8-1 of the ITAA 1997. However, where you are required to sleep away from home in the performance of your duties, expenditure on food and drink is considered to have been necessarily incurred in the performance of your duties and a deduction is allowable. Taxation Ruling TR 2004/6 Income tax: substantiation exception for reasonable travel and overtime meal allowance expenses ; provides the Commissioners views on situations where a taxpayer may be entitled to a deduction up to the 'Reasonable travel allowance amount' as determined by the Commissioner. Paragraph 18 of Tax Ruling TR 2004/6 provides that for a taxpayer domestic travel allowance expenses to be considered for exception from substantiation, you must be paid a bona fide travel allowance. The allowance must be paid to cover work-related travel expenses incurred for travel away from your ordinary residence, undertaken in the course of performing duties as an employee and which involves sleep away from home. In your case, you wish to claim the Commissioner's reasonable amount for travel expenses, other than your travel and accommodation. However as you were not in receipt of a bona fide travel allowance you are not entitled to claim the Commissioners reasonable travel allowance amount. Accordingly, consistent with the views expressed in TR 2004/6 you are not entitled to claim a deduction under the reasonable travel allowance provisions.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You are employed in the entertainment industry. | As a consequence of your employment you are required to meet new and existing clients and perform a wide range of duties to facilitate the organisation of events | As a consequence of your employment you are required to travel around Australia and sometimes overseas to manage client events. | While in the process of carrying out your employment duties you are sometimes invited by venue suppliers to visit other various sites and venues that may represent future opportunities to your prospective and current clients. | You accepted various invitations and travelled on work time. | As a result of accepting the invitations on your own initiative you incurred expenses on both domestic and international travel. | You have not been reimbursed for the expenses as your employer would only reimburse you for expenses that are directly related to the event that you were managing. | Further you have also not been paid an allowance by your employer while inspecting prospective new venues and sites. | You maintain that visiting the various other sites and venues were good opportunities for you to build stronger relationships with new and current suppliers and gain a better knowledge and understanding of the venue/service not currently required by your employer. | Further you maintain that you have incurred the expenses to enhance your knowledge and skill, and in doing so put yourself in a position to gain more clients and further enhance the services already managed for current clients. | You have a travel diary and receipts to support your claim.