Compare documents

1 Are you entitled to a deduction for the cost of flights, accommodation, meal and travel expenses incurred in attending shareholders meetings?

1 Yes . Question 2 Are you entitled to a deduction for the cost of meal expenses incurred while not at the shareholders meetings? Answer 2 No . This ruling applies for the following period: Year ending 30 June 20YY The scheme commences on 1 July 20YY

You own shares in a number of companies. You will attend annual shareholder meetings. You will incur costs for airfares, accommodation and taxi fares. You will incur costs for meals, both during the shareholder meetings and at your accommodation. The trips would be overnight trips within Australia. Your usual place of residence is a number of hours flight away from the meeting locations. You will attend a few of these meetings per year. You will attend these meetings so that you can personally ask questions and vote in company ballots.

Income Tax Assessment Act 1997 section 8-1

Section 8-1 of the Income Tax Assessment Act 1997 (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. Taxation Ruling IT 39 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 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 (for example, to derive exempt income or the obtaining of a tax deduction), 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; 91 ATC 4950; (1991) 22 ATR 613). In your case, the travel expenses incurred by you in attending the shareholder meetings are costs incurred in servicing your investment portfolio. However, for any portion of expenses not solely related to attending the shareholder meetings, you will be entitled to a deduction on a proportionate basis. Consequently, you will be entitled to a deduction for your airfares, accommodation and taxi fares incurred when attending shareholder meetings. However, the meals expenses will need to be apportioned and only the meals eaten during the shareholder meetings will be deductible.