The notion of offsetting the cost of an overseas trip taken for work against your tax bill is appealing, but be warned — the Australian Taxation Office has highlighted questionable work education and travel deductions as one of its key targets for checking this year.
It’s easy to see why being told that going on a cruise or a trip to Europe, listening to some lectures and being able to claim those costs as a legitimate work expense would appeal to some people. However, the ATO is currently investigating those kinds of schemes, and it seems quite likely that it will rule that such activities don’t qualify for a deduction.
In a press release, Tax Commissioner Michael D’Ascenzo noted that many schemes are currently being marketed which don’t meet current guidelines:
Under these types of arrangements taxpayers purchase a self-paced study package and take it with them to a holiday destination of their choice, or participate in seminars whilst travelling overseas or on cruise ships. The taxpayers then claim a deduction for the cost incurred including travel, food and accommodation.
The simple reality? If you’re taking a trip for work education purposes, document it as thoroughly as possible, and make sure the connection between your current, tax-incurring employment and what you’re doing is very obvious. If work-related activity only constitutes a portion of the trip, don’t try and claim the whole thing. As the ATO’s own ruling highlights:
Where an activity is undertaken both for income-earning purposes and for private purposes, it is necessary to apportion the expenses between the purposes.
If you’re at all unsure, consult a tax professional — and don’t complain if they suggest the deduction isn’t viable.
For other deductions, don’t forget to check out the relevant occupation guides. And remember that that the end of June, Lifehacker will once again be running Tax Week coverage, highlighting rule changes for tax and the best ways to ensure you get a refund.