Claiming tax deduction for business class flights

[stanchez47]

Hi guys,

Very straight forward question -

I am travelling to Shanghai in October for a week long conference. Work is paying for my flights in economy, but I want to go business class at my own expense (approx $4k out of my pocket).

Will I be able to claim the $4k out of my pocket? The travel agent is invoicing the business and myself seperatly.

Thanks in advance.

 

[Cruiser Elite]

Best you seek Professional advice from a reputable Financial Practitioner like an Accountant or such who has knowledge of your personal affairs - AFF is full of experts but may not be your best source of advice - only saying

 

[There'sOnlyOneJimmy]

Maybe give PWC a call…

 

[SydneySwan]

Hi guys,

Very straight forward question -

I am travelling to Shanghai in October for a week long conference. Work is paying for my flights in economy, but I want to go business class at my own expense (approx $4k out of my pocket).

Will I be able to claim the $4k out of my pocket? The travel agent is invoicing the business and myself seperatly.

Thanks in advance.

Welcome to AFF!

Not a straightforward question at all. If you were paying the entire fare and it was for a work-related conference then you should be able to claim the entire fare. However you have mudded the waters by paying for an upgrade. My accountant son just raised his eyebrows when I asked him but he is not a specialist in this area. You need proper advice.

Post automatically merged: Jun 28, 2023

Maybe give PWC a call…

The phone call would be more expensive than any possible tax deduction!!!

 

[CaptainCurtis]

As long as it's a work-related trip, I can't see a problem. It's not for the ATO to decide what method/class of travel you utilise. Agree with others though, would seek proper advice.

 

[drron]

You will have to keep an accurate travel diary ie what actual hours you were at the conference, also if you have days either side of the conference where you do other things.
I always claimed a percentage of the flights as we always had a vacation as well. Most of the conferences I attended were in the USA. So if I was at the conference for 3 days out of a 30 day trip then I claimed 10% of the fare -always paid J.The ATO are very kind and you don't have to count the first and last day when you are flying.

The only time I was queried was once when they queried quite a few of my deductions that were conference related. With the conference deduction they wanted proof of the hours I was actually at the conference. Though USA medical conferences usually issued a conference attendance statement. You scanned a card as you entered a particular session. Didn't have to stay though.

 

[SeatBackForward]

Similar questions exists on the ATO Community pages:
1) ATO Community
2) ATO Community

 

[CaptJCool]

The tax rulings on travel for work related professional development are available on the ATO Website

Seminars, conferences and training courses | Australian Taxation Office

Deductions for attending seminars, conferences, and first aid or other training courses connected with your work.

www.ato.gov.au

The headline
You can claim a deduction for the cost of attending seminars, conferences, or training courses to maintain or increase the knowledge, capabilities or skills you need to earn your income in your current employment.

You can claim:

• fares to attend the venue where the seminar, conference or training course is held

and as mentioned by others, there’s no cap on cost of fare nor on travel expenses per se ( such as exists for example on the banning of deductions for entertainment expenses or travelling expenses associated with owning a rental property)

Overseas travel expenses

Here's a list of the documents and information we usually need to process a private ruling request or objection about overseas travel expenses.

www.ato.gov.au

And here’s the keeping of diary reference

This following is not financial advice, that’s something you would need to obtain from a qualified accountant. However, it’s my observation of my lived experience of working out how those Tax Rulings apply to my specific case.

In an ideal world
It’s preferable to have your employer pay the full cost or receive a professional allowance paid to you by your employer to offset conferences expenditure.

Why ?
Because it’s must be directly related to your employment and the presence of such an allowance is a higher degree of proof that your employer requires you to do so.

Good luck with the deliberations

 

[drcam]

You can only claim the portion of your trip that was actually used for business. So if your conference was 3 days long but you went for 30 days you can only claim 10% of your fare. This is why some of us get around this by going on a medical education cruise where the entire trip is technically business/continuing education expenses. But even with a full deduction I cannot afford it.

 

[Quickstatus]

Very straight forward question -

Unfortunately not a straightforward answer

usually if travel is related predominantly to employment then it is tax deductible. As above reduce for % that is non incidental Private component.

That your employment paid for your ticket and then you paid extra is not an issue.

A similar construct would be your employment giving you a travel allowance and you book whatever ticket you want and making a tax deduction for the full price. A travel allowance would need to be declared in your tax return but your scenario does not suggest it's a travel allowance

You should also keep a travel diary to document the work related nature of the trip, expenses, receipts, calendars to confirm itinerary and any activity of a non incidental private nature.

Check with Accountant?. Always

 

[Seat0B]

Yes check with accountant for sure.

I’ve claimed overseas business travel in business class a number of times in different situations eg I paid it all myself and claimed reimbursement of economy fare from the client, the client paid economy and I paid the difference and booked business, the client paid it all, and every imaginable other variation. Never any issues with the claims.

Just make sure to keep receipts.

The ATO has never asked to see my business diary but I have always kept it scrupulously because they can ask now or up to 3.5 years later (for a business) or even longer for an individual and I never wanted to be caught out. The ATO also has a receipt exchange rate converter that you can use for any receipts that are not in AUD. It’s online.

 

[justinbrett]

You can only claim the portion of your trip that was actually used for business. So if your conference was 3 days long but you went for 30 days you can only claim 10% of your fare. This is why some of us get around this by going on a medical education cruise where the entire trip is technically business/continuing education expenses. But even with a full deduction I cannot afford it.

I doubt that would meet the "primary purpose of trip" criteria, which means you get nothing.

 

[Ade]

So if your conference was 3 days long but you went for 30 days you can only claim 10% of your fare. This is why some of us get around this by going on a medical education cruise where the entire trip is technically business/continuing education expenses.

I think similar applies for attending many conferences in a single trip .. I know someone who goes to the UK for 6 or so days and attends at least 5 or so conferences ... so will they can claim 5/6th of the whole expenses as conference expenses and 1/6th as personal - say took a day off to see the palace or change of guards or something .. ?

 

[drcam]

Yes, if you attend multiple business meetings so that most of your trip has them, you can claim more of your air ticket. Even if you somehow wangle a "business meeting" for an hour a day and do your own private schedule for everything else.

Post automatically merged: Jun 29, 2023

I doubt that would meet the "primary purpose of trip" criteria, which means you get nothing.

D'oh.

 

[Seat0B]

I think similar applies for attending many conferences in a single trip .. I know someone who goes to the UK for 6 or so days and attends at least 5 or so conferences ... so will they can claim 5/6th of the whole expenses as conference expenses and 1/6th as personal - say took a day off to see the palace or change of guards or something .. ?

Well my accountant suggested that if you are away, working for 6 days, then it would be reasonable to have a rest day or even a rest weekend, and that this would be part of the business component, especially if you then worked at least another day after the rest day. So careful itinerary planning might see you get a few days off and still legitimately be on business the whole time. But DEFINITELY get accounting advice specific to your situation.

 

[RooFlyer]

@CaptJCool - noted your quotes and ‘no cap’ observation. However, could there be a ‘reasonable’ hurdle somewhere in the legislation/ rulings were going via a higher class of airfare after employer pays for basic which would trip things up? Asking in general, not re the OP query,

 

[CaptJCool]

@CaptJCool - noted your quotes and ‘no cap’ observation. However, could there be a ‘reasonable’ hurdle somewhere in the legislation/ rulings were going via a higher class of airfare after employer pays for basic which would trip things up? Asking in general, not re the OP query,

It’s a hybrid hurdle where you are both contributing to the cost of travel.

My reading of the ruling in the absence of a cap and silence on who’s paid for what (given the employer paid for Y And The OP paid for the upgrade to J) is to return to the general provisions

How to claim deductions | Australian Taxation Office

How to claim income tax deductions for work-related expenses and other expenses, and record your deductions.

www.ato.gov.au

• You must have spent the money yourself and weren't reimbursed.
• The expense must directly relate to earning your income.
• You must have a record to prove it (usually a receipt).

The potential denial of deduction is here

You can't claim a deduction if your employer pays for the expense or reimburses you for it. If we think your employer may reimburse you for an expense, we may check with them.

This suggests to err on the side of caution that the employer has paid for a Y fare (no cap to fare) and the OP wants to fly in style. Fair enough - however, the general provisions suggest refrain from the claim seeing the expense was “covered” by the employer and so the choice of travel class was taken out of the hands of the employee.

Hence my comment about paying it all yourself or ensuring you have a travel or professional development allowance to offset your chosen costs.

 

[Ade]

paying it all yourself

If I may ask, Re the above ;

1. For all my work travel, as a contractor, I need to pay upfront and I will be reimbursed as part of next month's pay.
2. OR I was given the option to not get reimbursed and the cost I spent on work travel will be offset from my income - I was told this way, my taxable income will be reduced by $ spent on work travel and hence, I will be taxed less - Is this correct?


3. When I asked if the $ reimbursed by my company, as part my next month's pay, is taxable - I was told no ... Is this correct?

professional development allowance to offset your chosen costs.

Re the above ;

1. Is the professional dev allowance (usually) part of the salary package? OR
2. Is it separate to the annual salary and needs to be consumed within the FY ?

 

[CaptJCool]

If I may ask, Re the above ;

1. For all my work travel, as a contractor, I need to pay upfront and I will be reimbursed as part of next month's pay.
2. OR I was given the option to not get reimbursed and the cost I spent on work travel will be offset from my income - I was told this way, my taxable income will be reduced by $ spent on work travel and hence, I will be taxed less - Is this correct?


3. When I asked if the $ reimbursed by my company, as part my next month's pay, is taxable - I was told no ... Is this correct?

Re the above ;

1. Is the professional dev allowance (usually) part of the salary package? OR
2. Is it separate to the annual salary and needs to be consumed within the FY ?

1 & 2 Basically PAYG doesn’t receive GST Credits. Other expenses do. So who’s getting the tax benefit ?

3. Correct reimbursements are not taxable and of course you can’t claim

Prof Dev for us was in an EBA and could be used whenever. The employer required PD so gave a “flexible” allowance to spend on what you needed. This opens the door to a clear tax deduction.

In some occupations, yes it’s separated and can only be used within a set time period. Eg 1-2 years and operates more of a spend and reimbursement

As mentioned
It needs to be directly related to your current employment. You can't claim a data analytics conference if you’re in say frontline call centre operations

 

[andye]

My understanding is that if the majority of the trip including travel days is related to business (I.e primary purpose) the full fare qpis deductible but if it dips below 50% you can only claim the proportion. I think you are allowed the day following as rest if you arrive at your destination after midday.
Not sure on the specifics of the employer with personal upgrade interpretation though (intuitively I think it should but maybe wishful thinking)