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Is the taxpayer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for travel expenses incurred to attend a company Annual General Meeting (AGM)?

Yes. The taxpayer is entitled to a deduction under section 8-1 of the ITAA 1997 for travel expenses incurred to attend a company AGM.

The taxpayer has an investment portfolio that includes a shareholding in a company.

The taxpayer earns dividend income from their shareholding in the company.

The taxpayer intends to incur travel expenses to attend the AGM for the company.

Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.

Taxation Ruling IT 39 Expenditure incurred in servicing or managing income producing investments - application of section 51(1) considers the deductibility of expenditure incurred in servicing or managing income producing investments. IT 39 states that where expenditure is incurred in 'servicing' an investment portfolio (such as consulting with inter-state stock brokers and attending inter-state stock exchanges), the expenditure should properly be regarded as incurred in relation to the management of income producing investments and thus as having an intrinsically revenue character.

However, Taxation Ruling TR 95/33 Income tax: subsection 51(1) - relevance of subjective purpose, motive or intention in determining the deductibility of losses and outgoings provides that where it is concluded that the disproportion between the outgoing and the relevant assessable income is essentially explained by reference to the independent pursuit of some other objective (eg for private purposes), then the outgoing must be apportioned between the pursuit of assessable income and the other objective ( Fletcher v. Federal Commissioner of Taxation (1991) 173 CLR 1; [1991] HCA 42; (1991) 91 ATC 4950; (1991) 22 ATR 613).

The travel expenses incurred by the taxpayer in attending the company AGM are costs incurred in servicing their investment portfolio. If the travel relates solely for the purpose of attending the AGM, the taxpayer will be entitled to a deduction under section 8-1 of the ITAA 1997 for the cost of that travel.

However, if the purpose of the travel is predominantly of a private nature (attendance at the AGM being incidental), only the expenses that relate directly to the income producing purpose will be an allowable deduction.

Date of Amendment Part Comment 11 December 2015 Reasons for decision Updated case citation. References Updated case citation.

Date of Amendment | Part | Comment

11 December 2015 | Reasons for decision | Updated case citation.

References | Updated case citation.