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Spouse’s travel expenses not deductible

A disabled taxpayer has been denied a deduction for his wife’s travel costs where she accompanied him to conferences overseas: Re WTPG and FCT [2016] AATA 971 (AAT, Ref No 2015/6427, Forgie DP, 30 November 2016). Background In September 2013, the taxpayer spoke at a conference in the UK about his employment duties in Australia. While there, he also attended a second conference and a series of work-related meetings. His attendance at the conferences was in an official capacity and was approved by his employer. The taxpayer’s airfares were reimbursed by his employer and the conference organisers paid for his accommodation and various out-of-pocket expenses. The taxpayer needs a carer to assist him because of certain disabilities. His employer did not provide a carer for the trip to the UK, so the taxpayer’s wife accompanied him. Her assistance was necessary to enable the taxpayer to travel to the UK and attend both conferences. She was not employed by the taxpayer’s employer and she was not paid for the assistance she provided. The ATO issued a private ruling stating that the travel expenses incurred by the taxpayer were not deductible under s 8-1 of the ITAA 1997 because they were of a private or domestic nature. The ATO also ruled that a deduction was denied under s 26-30 of the ITAA 1997. That section generally denies a deduction for the travel costs of a relative who accompanies a taxpayer on work-related travel, subject to certain exceptions. The taxpayer challenged the private ruling. Firstly, he argued that the expenses of engaging a carer or physical assistant that are necessarily incurred in performing a person’s duties as an employee, and to the extent that they are so used, can no longer be treated as personal or domestic expenses. Secondly, the taxpayer submitted that there appears to be a conflict between s 26-30 of the ITAA 1997 and s 5 of the Disability Discrimination Act 1992 (the DD Act), which may be resolved by taking the purposive approach to statutory construction. In other words, s 26-30 of the ITAA 1997 is concerned with the deduction of expenses of a relative as a relative, and not as a carer, whereas the taxpayer’s wife was not travelling in her capacity as a relative. Decision The AAT analysed many cases concerning s 8-1 and concluded that the spouse’s travel costs were not deductible under s 8-1. Essentially, this was because the expenses were incurred by the taxpayer in the course of enabling him to undertake his duties rather than in the course of actually undertaking those duties. The AAT also agreed with the ATO that the expenses were of a private or domestic nature. Although there was no need to do so, the AAT also concluded that s 26-30 would apply to deny a deduction. The AAT said that it was clear from s 26-30(1) of the ITAA 1997 that it is wholly concerned with a loss or outgoing incurred and attributable to the travel of a relative accompanying the taxpayer when the taxpayer is him or herself travelling for the purpose of gaining or producing assessable income. There is no room to read into s 26-30 an exception if the relative is accompanying the taxpayer as a carer and in the role of carer. The taxpayer also failed to convince the AAT that denying him a deduction constituted discrimination under the DD Act. The AAT said the decision to deny a deduction would have been the same if the taxpayer did not have disabilities that required him to be accompanied by a carer.

#savings #personalfinances

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