Private ruling: Travel expenses
Date of advice: 19 February 2016
Published: April 2016
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to a deduction for the food, accommodation, travel expenses and the cost of materials used for repairs relating to your rental property? | A1: Yes.

Relevant facts and circumstances: You travelled to your rental property to inspect the property and to change real estate agents. The trip involved an overnight stay. You returned for additional nights to undertake repairs to the property. Due to the amount of work that was required to be completed the trip involved multiple nights' accommodation.

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. Rental property expenses are deductible under section 8-1 of the ITAA 1997 for the period the property is rented or is available for rent. Generally, the cost of travel to inspect or maintain a rental property is an allowable deduction under section 8-1 of the ITAA 1997 as it has been incurred in connection with gaining income from the investment property. Where an overnight stay is involved, you are entitled to claim for travel, meals and accommodation. Where no overnight stay is involved, no deduction is allowable for meals. Where travel related to your rental property is combined with a holiday or other private activities, a deduction is only allowable for a portion of the expense. Section 25-10 of the ITAA 1997 allows a deduction for repairs to a property used to generate rental income. In your case, the trustees of the fund twice travelled to the rental property to attend to issues relating to, and to perform repairs on, the property. As it is considered that the primary purpose of the trips was for the rental property, you are entitled to a deduction for the accommodation, meal and travel expenses incurred and for the cost of materials used in the repairs.