Airfare deductable scenario

[b7277]

I read on the Ato website that i can claim travel expense.

http://www.ato.gov.au/Individuals/I...ductions/?default=&page=2#What_can_you_claim?

I am currently in singapore and planning to travel to Sydney to meet up with my agent to discuss about my IP and inspect if possible. However, this is not the sole purpose of my visit. I probably will be in Sydney for 10-12 days. In this scenario how much of the airfare can i claim. what is the % of the airfare?

Appreciate your help on this.

Regards
b7277

 

[D.T.]

I read on the Ato website that i can claim travel expense.

http://www.ato.gov.au/Individuals/I...ductions/?default=&page=2#What_can_you_claim?

I am currently in singapore and planning to travel to Sydney to meet up with my agent to discuss about my IP and inspect if possible. However, this is not the sole purpose of my visit. I probably will be in Sydney for 10-12 days. In this scenario how much of the airfare can i claim. what is the % of the airfare?

Appreciate your help on this.

Regards
b7277

My understanding is (from visiting IP in perth when I was living in Adelaide):

You need to apportion the visit into % that is property related and % that is not, then apportion the expenses (airfare, hire car, accomodation) accordingly. Then that proportion is deductible.

 

[geoffw]

Claiming travel expense deductions

According to ATO you cannot claim the airfares in your scenario- only expenses directly incurred.

 

[DEC]

Claiming travel expense deductions

According to ATO you cannot claim the airfares in your scenario- only expenses directly incurred.

I spoke to my accountant about doing this and he said I could claim, the example I used is my main purpose for the trip will be coming back for inspections, maintenance and tax return.

What overseas travel expenses can you claim?
If you are an Australian resident and own a rental property overseas, you may travel overseas on holiday and inspect your rental property at the same time.
If the main purpose of the trip is a holiday, you cannot claim the cost of getting there - you can only claim local expenses directly related to inspecting the property, such as taxi fares and part of your accommodation expenses.
Attention
If we select your travel expense claim for review or audit, you must be able to show your reason for visiting the rental property.
End of attention
The records you keep, such as invoices for your accommodation or airline tickets, will help you do this. If you spend six or more nights away from where you live, you must keep a travel diary or similar document that shows the nature of the activities, dates, places, times and duration of your activities and travel.

http://webcache.googleusercontent.c...ns/?default=&page=6+&cd=2&hl=en&ct=clnk&gl=au

web cache because Geoffs link is broken

 

[geoffw]

There's a brief coverage in this publication on example 14, page 13.

The Hitchmans also owned another rental property in a resort town on the north coast of Queensland. They spent $1,000 on airfares and $1,500 on accommodation when they travelled from their home in Perth to the resort town, mainly for the purpose of
holidaying, but also to inspect the property. They also spent $50 on taxi fares for the return trip from the hotelto the rental property. The Hitchmans spent one day
on matters relating to the rental property and nine days swimming and sightseeing.

No deduction can be claimed for any part of the $1,000 airfares.

The Hitchmans can claim a deduction for the $50 taxi fare.

A deduction for 10% of the accommodation expenses (10% of $1,500 = $150) would be considered reasonablein the circumstances. The total travel expenses the Hitchmans can claim are therefore $200 ($50 taxi fare plus $150 accommodation). Accordingly, Mr and Mrs Hitchman can each claim a deduction of $100.

The link I posted works for me- it says

If you are an Australian resident and own a rental property overseas, you may travel overseas on holiday and inspect your rental property at the same time.

If the main purpose of the trip is a holiday, you cannot claim the cost of getting there - you can only claim local expenses directly related to inspecting the property, such as taxi fares and part of your accommodation expenses.

Whether this is applicable to the OP I don't know. I'm just parroting the ATO.

 

[DEC]

The Hitchmans also owned another rental property in a resort town on the north coast of Queensland. They spent $1,000 on airfares and $1,500 on accommodation when they travelled from their home in Perth to the resort town, mainly for the purpose of
holidaying

If you are an Australian resident and own a rental property overseas, you may travel overseas on holiday and inspect your rental property at the same time.

If the main purpose of the trip is a holiday,

So make sure the main purpose of your trip is not a holiday which may not help in the OP's case.
Mine wont be, I will be doing inspections, maintenance and tax.
Any socialising will be done after business hours.

The link I posted works for me- it says
Whether this is applicable to the OP I don't know. I'm just parroting the ATO.

I'm using chrome and I got "Content not found! Please confirm content ID (0)."
But using the incognito tab it worked fine

 

[redwing]

Prudent to keep a diary and receipts, business cards for REA's, PM's that you speak to as part of your evidence trail

 

[b7277]

Thank you all. There are few things i will be doing in this 6-10 day visit apart from visiting my RE and my accountant for TAX purposes. SO i guess i should be able to claim a % of the airfare.

Per day of airfare = airfare cost / no of days in Australia.

As an example if the cost is 800 SGD = 800/7 = 114.3 SGD + rental car cost for that day + any other expense. Does this sound right.

Or am i over thinking..

 

[geoffw]

Thank you all. There are few things i will be doing in this 6-10 day visit apart from visiting my RE and my accountant for TAX purposes. SO i guess i should be able to claim a % of the airfare.

Per day of airfare = airfare cost / no of days in Australia.

As an example if the cost is 800 SGD = 800/7 = 114.3 SGD + rental car cost for that day + any other expense. Does this sound right.

Or am i over thinking..

Get professional advice. Every scenario is a little different.

If you only had one day, as per your example, you would have trouble claiming that your main purpose was business, so you would not be able to claim any percentage of the airfare- although you could claim accommodation and expenses incurred, according to my reading of the ATO resources given.

I don't know how they define principal purpose. That's something where you would need advice.

 

[Paul@PFI]

Travel

And why has nobody has mention a travel diary yet ??

The ATO has an expectation where a taxpayer is intending to claim international travel costs that where the travel exceeds a specified number of nights that a travel diary be maintained. This diary will be used to apportion the deductib;e v's the non-deductible elments. There is no test for "predominant use" based on the IP or holidays etc. But no diary = no deduction.

So lets assume you fly in and stay 12 days. It may be that the IP issues were compelling and your physical attendance desired. Well the diary might apportion your airfare so 1/12 as an example may be deductible.

http://www.ato.gov.au/Individuals/I...avel-expenses/Keeping-travel-expense-records/


If unsure then a private ruling may avoid penalties and interest.

 

[attrill]

How about scheduling appointments on the first day, last day, and one in the middle? A paper trail to show that appointments could not be made at any other time would give a reason to be on the gold coast (or where ever) for 10 days.

Of course I would not recommend any sort of strategy that would deny the ATO of every cent of income that it was entitled to.

 

[Paul@PFI]

Apportionment

I once had a client who insisted his travel was work related....ATO wrote to his employer and asked if they paid him while he was travelling, on paid leave etc. They said "he was on paid annual leave". Then denied his deduction and imposed penalties.

This approach is typical of teachers especially HSC teachers (history etc) who claim they are doing "field work" related to the job in Greece, France etc..... ATO look at remuneration for that period as a means to establsih just how closely it is work related. If its paid salary and not leave then its a fair chance of being OK. If its LSL etc then its a bit harder...If it was really essential to earning income why did they not pay you? gets asked. OK this is different from a rental BUT shows extent ATO can go to consider the whole of the circumstances of the travel and the genuine nature of a diary. They look to validate it with substantiation evidence.
- Who accompanied on trip ?
- What else did you do..Surely a whole day to meet an agent can be checked with the agent by a simple phone call. ATO arent stupid.
- ATO have open access to DFAT travel records. Have seen many a client claim they travelled alone to be told that their wife and kids were on same flights !! (Or one client who asked for extra time to defend a case and they smashed him since he never left country)

So if you stay at Hyatt Coolumn resort and there are four staying there clearly seen on receipts the ATO might consider that a holiday was involved...The rental element may be just one of many things undertaken in Australia. If employer is paying them to be here it could taint the whole claim.

 

[D.T.]

Just noticed his travel was international. I used the method described in my previous post in this thread for interstate travel. Im unsure if there's any differences between international and interstate for tax purposes.