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ATO Interpretative Decision

ATO ID 2002/885 (Withdrawn)

Income Tax
Deductibility of expenses incurred in relation to a cancelled investment seminar

Attention This ATO ID is withdrawn. Guidance on this issue contained in this ATO ID can be found at the following Seminars, conferences and education workshops (QC 31928) and Other travel expenses (QC 31982).
Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision withdrawn 29 September 2017.

CautionCAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


Issue

Is the taxpayer entitled to claim a deduction under section 8-1 of the Income Tax Assessment Act 1997 ('ITAA 1997') for the costs they incurred with the intention of attending an interstate investment seminar which was later cancelled?

Decision

No. The taxpayer is not entitled to claim a deduction under section 8-1 of the

ITAA 1997 for the costs incurred in order to attend an interstate investment seminar which was later cancelled.

Facts

The taxpayer holds an investment portfolio of shares.

The taxpayer registered to attend an interstate investment seminar.

The intention of the taxpayer was to attend the interstate seminar and remain interstate for an extra amount of time for private purposes.

The taxpayer received a phone call, prior to leaving, from the seminar presenter stating that the seminar the taxpayer was to attend was cancelled.

As the flight ticket was not refundable, the taxpayer decided to go interstate anyway for private purposes.

The taxpayer incurred the cost of a flight ticket, accommodation, food and transfers in relation to the interstate travel.

Reasons for Decision

Section 8-1 of the 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.

A number of significant court decisions have determined that, for an expense to satisfy the tests in section 8-1 of the ITAA 1997:

·
 it must have the essential character of an outgoing incurred in gaining assessable income or, in other words, of an income-producing expense ( Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 7 AITR 166; (1958) 11 ATD 404)
·
 there must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income ( Ronpibon Tin NL & Tongkah Compound NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; [1949] HCA 15;(1949) 4 AITR 236; (1949) 8 ATD 431); and
·
 it is necessary to determine the connection between the particular outgoing and the operations or activities by which the taxpayer most directly gains or produces his or her assessable income ( Charles Moore & Co (WA) Pty Ltd v. Federal Commissioner of Taxation (1956) 95 CLR 344; (1956) 11 ATD 147 (1956); 6 AITR 379; FC of T v. Cooper (1991) 29 FCR 177; 91 ATC 4396; (1991) 21 ATR 1616; Roads and Traffic Authority of NSW v. FC of T (1993) 43 FCR 223; 93 ATC 4508; (1993) 26 ATR 76; Federal Commissioner of Taxation v. Hatchett (1971) 125 CLR 494; 71 ATC 4184; (1971) 2 ATR 557).

The taxpayer's intention at the time of incurring the expenses was to attend an interstate seminar. Had the seminar not been cancelled, the taxpayer may have been entitled to claim a deduction for a portion of the expenses incurred.

However, the taxpayer used the trip wholly for private purposes. The expenses incurred did not have any connection with gaining or producing the taxpayer's assessable income and therefore do not meet the requirements of section 8-1 of the ITAA 1997.

Consequently, the taxpayer's expenses in relation to the interstate trip are not deductible under section 8-1 of the ITAA 1997 as they were not incurred in gaining or producing assessable income and were also private in nature.

Amendment History

Date of Amendment Part Comment
13 March 2015 Reasons for Decision Insert medium neutral citation: [1949] HCA 15
  Case References Insert medium neutral citation: [1949] HCA 15

Date of decision: 26 August 2002

Year of income:Year ended 30 June 2002

Legislative References:
Income Tax Assessment Act 1997
   section 8-1

Case References:
Charles Moore & Co (WA) Pty Ltd v. Federal Commissioner of Taxation
   (1956) 95 CLR 344
   (1956) 11 ATD 147
   (1956) 6 AITR 379

FC of T v. Cooper
   (1991) 29 FCR 177
   91 ATC 4396

Federal Commissioner of Taxation v. Hatchett
   (1971) 125 CLR 494
   71 ATC 4184
   (1971) 2 ATR 557

Lunney & Hayley v. Federal Commissioner of Taxation
   (1958) 100 CLR 478
   (1958) 7 AITR 166
   (1958) 11 ATD 404

Roads and Traffic Authority of NSW v. FC of T
   (1993) 43 FCR 223
   93 ATC 4508

Ronpibon Tin NL & Tongkah Compound NL v. Federal Commissioner of Taxation
   (1949) 78 CLR 47
   [1949] HCA 15;
   (1949) 4 AITR 236
   (1949) 8 ATD 431

Keywords
Travel expenses
Domestic travel expenses
Private or domestic expenses
Shareholders
Conference & seminar expenses

Siebel/TDMS Reference Number: CW3100905; 1-6EUFICM; 1-AXGK9TZ

Business Line: Small Business/Individual Taxpayers

Date of publication: 31 August 2002

ISSN: 1445-2782

ATO ID 2002/885 (Withdrawn) history   Top  
   Date   Version 
   26 August 2002   Original statement   
   13 March 2015   Updated statement   
 You are here ®  29 September 2017   Withdrawn   


 


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