Deduction for international airfares

Here are the facts:

• Since 2003 I have been making two or three trips a year to perform work in the USA
• The work typically involves one or two weeks full time dedicated to one or two clients
• Sometimes I have flown straight there and back (maybe 1 or 2 days off at either end)
• Other times I have organised for 2 - 3 weeks vacation before or after my work assignment
• Most of the vacations are in the USA, but once I bought a round-the-world ticket (because it was cheaper) and holidayed in Europe
• If it wasn't for the work, I certainly wouldn't haven taken the holiday (as when I travel for work isn't the best season for vacation)
• My client(s) pay me an agreed sum and this covers my fees, airfares, hotels, taxi, meals etc
• Sometimes airfares I bought were business class, others were economy upgraded to business on points, others were business class flights using points

Simple question: Am I entitled to a full-deduction for the airfare or do I need to apportion?

Thank you.

 

Hi PCHong,

Are you being taxed in Australia?
If apportioning, how it will be done? Whether it is based on km's, cost of flight direct, etc.

Cheers and good luck,

Dan

 

How much is deductible?

Yes - Aussie resident

I presume for the trips that were 100% work, the airfare is fully deductible. However, for the other trips I'm wondering if a full deduction is available as the work trips overseas are regular and I can't undertake the work with only "part" of an airfare. The holiday is "tacked on", eventhough it may exceed the duration of the work portion.

Thanks for your help

 

Hi PCHong,

One of the accountants on this forum may be able to help you figure out how much of the fare is deductible.

Cheers,

Dan

 

If you are an employee and you elect to take some leave at your expense whilst overseas on an assignment then providing it is not a significant purpose of the trip then your employer won't have to apportion the airfare.

If your employer pays for that recreation time as well, then your employer will need to apportion the airfare and suffer FBT, since the mere fact that the employer paid for the recreation indicates a dual purpose for the trip.

Where you are self-employed you will need to apportion the airfare for any more than minor and incidental recreation time.

Whether you travel economy or business class should not be an issue, but where you redeemed personal air travel credits to get an upgrade does not necessarily entitle you to claim that additional upgrade (i.e. equivalent full fare price) as a deduction.

Where you are assessed for income on your travel perks (air mile credits) as non-cash business benefits, you might be able to claim a deduction for redemption of these benefits.

This is all very general since an Accountant should review your detailed arrangements.

Cheers,

Rob

 

Employer deduction?

Thanks for the information. My company pays for the airfare. I just arrange to take time off while overseas. Obviously I don't get paid anything while taking vacation, but I align my vacation with the work trips so I can save on airfares.

Sometimes I use air points to upgrade from economy to business class (most of the points I've got are from work trips). But I thought air points weren't taxable?

So I guess the question is does the employer get to claim a full deduction for the airfare? Are my air points taxable?