Your client attends an international conference in Paris. The conference goes over 4 days. Afterwards your client flies to Kopenhagen to visit family for another 4 days. So all up your client is in Europe for 8 days excluding the day of arrival and departure.
And spends $5,000 – $2,000 return flight to Paris, $1,000 conference, $1,000 accommodation while at the conference, $1,000 return flight to Copenhagen. How much can your client claim as a tax deduction for conference travel?
If the conference is sufficiently connected to their work, your client meets the all-present s8-1(1). You can include the $1,000 for the actual conference in their D5 tax deduction for other work-related expenses.
The trip to Copenhagen is of a private nature and so falls under the negative annex of s8-1(2)(b). No tax deduction.
But what about the return flight to Paris? How much can we claim and where do we claim it?
D2 or D5
Let’s start with the ‘Where’. Is it D2 or D5? Work-related travel expenses or Other Work-related expenses? Your instinct probably tells you to put it into D5 since this is where the attendance fee for the conference goes. And you are right. It goes into D5.
D2 is for travel expenses incurred in performing the work as an employee. So if your client was actually performing work at the conference as an employee, for example as a presenter, rather than just attending, then the travel expenses would go into D2. Unless of course your client is reimbursed for the expenses by their employer, in which case there wouldn’t be any tax deduction in the first place.
How Much
So we show the travel expenses in D5. But hut how much? This is where it gets very grey. The new much discussed TR 2017/D6 states in Point 17, ” To the extent that any part of the expenses are of a private or domestic nature, the expenses must be apportioned – unless the private or domestic element is merely incidental to gaining or producing the employee’s assessable employment income.”
So even though TR 2017/D6 focuses on D2 and not D5, we assume that the same principle applies. Visiting family for half of the time is probably not incidental. So we can’t claim the full cost. But how do we apportion it? There is no hard and fast rule but common standard is to use the number of days. So on this basis you claim 50% of the return plane ticket to Paris as a D5 tax deduction since your client spends 4 of the 8 days in Europe actually attending the conference.
Time to ‘Rest’ or ‘Network’
What about conferences at locations with a high ‘leisure value’? Like a ski resort? Sessions run for a few hours in the morning and late afternoon with plenty of time in between for attendees to ‘rest’ or ‘network’.
So far there is no Australian tax ruling that categorically excludes a tax deduction for these. So the general deduction in s8-1(1) applies. If attendees can show in an audit that they attended all sessions and barely saw the slopes, there is a tax deduction. At least in Australia. Other countries have been a lot more aggressive and barred tax deductions like these.
Seminars, Workshops and Courses
We focused on conferences here. But of course the same applies to seminars, workshops and courses as long as they are sufficiently connected to your client’s work.
But watch our for courses. If the course is to get a formal qualification from a school, college, university or other place of education, then you are in D4 territory. The expenses go into D4 Work-related self-education expenses, possibly reduced by the s82A $250 threshold.
MORE
Tax Deduction for Fundraising Events
Tax Deduction for Entertainment
Disclaimer: Tax Talks does not provide financial or tax advice. All information on Tax Talks is of a general nature only and might no longer be up to date or correct. You should seek professional accredited tax and financial advice when considering whether the information is suitable to your or your client’s circumstances.
Last Updated on 23 March 2020
