Can deduct travel gift to relative for helping me renovate my property?

[rodimus]

Hi

Last year my relatives helped me do the final fitout for my investment property which is under my trust name.
Because they are my family members, they do not want any money payment.

As a reward, I paid for a 3 day trip to Sydney.

Question is, can I claim the expenses for the trip as a tax deduction?

I mean, it is like a 'payment' in return for service...

 

[Perp]

Hi

Last year my relatives helped me do the final fitout for my investment property which is under my trust name.
Because they are my family members, they do not want any money payment.

As a reward, I paid for a 3 day trip to Sydney.

Question is, can I claim the expenses for the trip as a tax deduction?

I mean, it is like a 'payment' in return for service...

I'm thinking no, for several reasons.

Firstly, because it was voluntary on your part. Even if it wasn't (ie if they'd said they'd only do the work if you'd pay them for the trip to Sydney)... secondly, I doubt the ATO would go for it because it opens up the floodgates for all sorts of claims.

For example, what if my husband said he'd only work on a property held by me in a unit trust, if I paid for him to go to London... Now, in exchange for him going there and changing some lightbulbs, our family has gained a tax-deductible trip to London.

How do you determine what's a fair amount to have paid them for the work, without them having invoiced you?

Thirdly, if you somehow were able to claim it, it'd either be as a fringe benefit (which would incur fringe benefits tax), or else your relatives would have to claim the cost of the trip as income and pay tax on it, neither of which are (presumably) desirable, and negate the advantage to the Trust of claiming the expense.

 

[marg4000]

The only way I can see that it COULD be tax deductible (to you) would have been to formalise the renovation work.

i.e., relative gives you an invoice for the value of the renovation work which you pay. The amount could be equal to the Sydney trip.

They then have to declare the income on their tax return. Unless a high income earner then tax should not exceed the 30% mark.

The trip is for pleasure and therefore not deductible in any shape or form.
Marg

 

[rodimus]

hmm, interesting,.,..... ok, how about if the property is under my trust, and I gift the holiday to them? It can be seen as a gift to people who helped the company?

 

[geoffw]

A trust can distribute to named beneficiaries.

I don't know how difficult it would be to add beneficiaries to the trust deed.

However any distribution becomes taxable income to them. So it's only worth it to junior members if the family who are below the tax threshold.

That's only my understanding of family trusts and how they work. Get professional advice.

 

[Terryw]

Hi Geoff

Don't forget trusts (most DTs anyway) can distribute to unnamed beneficiariaries too. Most relatives would be beneficiaries without actually being named.

Adding a person by naming them will probably result in a resettlement of the trust.