Can you claim a tax deduction for work travel booked with FF Miles?

[kaelo]

Hi all,

I'm sure I'm not the first to ask this question, but I couldn't find a thread in relation to it on here.

I recently undertook a RTW trip which was 50/50 business/pleasure. This all business class trip cost just shy of 250,000 Virgin miles. Pricing the same trip out in actual dollars would have cost anywhere between $8000-12000.

What I'd like to know is, is there any mechanism to claim a dollar value for the business component. If I had paid dollars I would be able to claim the business portion - but as I paid with points, am I able to claim anything?

It would be nice to be able to claim a small portion, even a couple of thousand dollars.

I'm sure there are some accountant types on here who might have an answer.

Cheers,

 

[trippin_the_rift]

You didn't pay dollars for the miles and therefore the cash component of the flights is $0.

If you had bought the miles and then used them... Different story.

 

[chelzmalee]

Airfare is of no claimable value.

However, overland travel may have claim, as well as meals and accom. (I work in an accountants office, and am not a CPA. Perhaps a CPA or FIPA may be able to help further...)

 

[andye]

The "ATO reasonable allowances" may be useful for meals/accommmodation. You may well be able to claim airport transfers on business days. You would need to compile a travel diary.
My understanding is that you can claim the full cost ($ not points) of flights if the prime purpose (and majority of time spent) of trip is business, otherwise claim in proportion to business activity
Most would prefer miles not to have a value in the eyes of the ATO

 

[Hvr]

<snip>
Most would prefer miles not to have a value in the eyes of the ATO

And this is the clincher. If points did have a value then they might be considered income and be taxable on the way in and then claimable on the way out when used entirely for business.

Far better to enjoy them the way we do now.

Of course just don't get divorced and have the family court decide how to value/split FF points.
Divorce: Who gets the air miles? | Family Law Express News

 

[JohnM]

Divorce: Who gets the air miles? | Family Law Express News

Well, that site is a deep trove of fascinating information! I kept all my FF points - nobody even thought to consider them back in about 2000.

OT, but a big hard luck story (for the man) found rummaging around on that site was when his former wife, who had been a regular lotto player with money provided by him during their marriage, won $6M in lotto 6 months after their divorce. His claim for a share failed.

 

[medhead]

You can claim whatever cash money you paid in taxes. Personally, I don't apportion the airfares between business and work time away. Since I would still have to buy the full airfare if I only went for the work purpose. This doesn't agree with the ATOs position.

 

[kaelo]

Thanks for the advice guys.

Seems clear one can't claim a value of the miles which is fair enough. As pointed out, probably best they don't have a value or we'd have to pay a FF Mileage Tax!

I'll stick with claiming the accommodation and car hire costs associated with the work components.

Cheers,

 

[Spongbob]

Not being an expert, I suggest you can claim the full dollar cost of the air travel if it is work related (i.e. you must fly to X for work-related reasons). But any private aspects of the travel - some leave tacked onto the work travel - cannot be claimed. The ATO have a schedule about the accommodation, meals etc you can claim at various locations, and this amount increases with with your salary.

 

[kaelo]

Not being an expert, I suggest you can claim the full dollar cost of the air travel if it is work related (i.e. you must fly to X for work-related reasons). But any private aspects of the travel - some leave tacked onto the work travel - cannot be claimed. The ATO have a schedule about the accommodation, meals etc you can claim at various locations, and this amount increases with with your salary.

Thats what I was hoping - that if the value of my flights should I have purhased with dollars was $10,000, and that 50% of my flights related to work, that I could claim ~$5000.

Unfortunately from the responses here thats not the case and I can't claim any of the air component

 

[andye]

Not being an expert, I suggest you can claim the full dollar cost of the air travel if it is work related (i.e. you must fly to X for work-related reasons). But any private aspects of the travel - some leave tacked onto the work travel - cannot be claimed. The ATO have a schedule about the accommodation, meals etc you can claim at various locations, and this amount increases with with your salary.

I (as a an amateur) thought the 'reasonable allowances' only applied if you were given a travel allowance by your employer and were the level below which you did not need to supply receipts etc.

I always assumed that if you were self-employed you could provide a similar allowance to yourself but not sure if that's true

 

[Spongbob]

Kaelo, without wanting to know too much about the details of your RTW travels, I assume your flights to some destinations were for work reasons while your flights to other destinations were for private reasons. If so, I think you would need to apportion the dollar costs of the air travel. For instance, if you flew AUS to LHR for work-related reasons and then flew from LHR to places in Europe for private reasons, the AUS-LHR travel has a private aspect to it and all the flights in Europe are completely for private reasons. The ATO website has reasonably clear directions as to how you allocate travel costs to work-related and private reasons, and that would be more accurate than someone on AFF. Cheers

 

[kaelo]

Hi Spongbob,

Thanks for the reply. As it happens, I flew MEL-LHR for personal, then LHR-LAX for business. Sure, I did a little bit of pleasure there as well, but it was predominantly business.

My basic question is however, can I claim dollars as a deduction given all my flights were paid for using miles? I'm only talking about flights here. I know I can claim some aspects of accomodation, car hire etc. I had previously heard that one COULD claim dollar value of the FF miles, if you can show arrive at a reasonably dollar value for the miles. The advice given here however seems to indicate you can't.

Lets say I flew MEL-LHR for pleasure and then LHR-LAX-MEL for work. The LHR-LAX flights are worth about 150,000 points but if I was to purchase that one way ticket it might cost me $5000AUD. I wanted to know if I can claim that (or a portion of that) $5000AUD.

The wise people on here don't believe so, which is contrary to what I've heard. I was hoping to get some guidance either way before taking it to my accountant who will look no doubt tilit his head to the side and give me that puzzled dog look

 

[serfty]

It was not so long ago you could bung your booking into the SaudiA website to get a pseudo value.

Some would say the cost of top up points would be a good guide ...

 

[medhead]

Thats what I was hoping - that if the value of my flights should I have purhased with dollars was $10,000, and that 50% of my flights related to work, that I could claim ~$5000.

Unfortunately from the responses here thats not the case and I can't claim any of the air component

I interpret full dollar cost to me cash money cost.

I (as a an amateur) thought the 'reasonable allowances' only applied if you were given a travel allowance by your employer and were the level below which you did not need to supply receipts etc.

I always assumed that if you were self-employed you could provide a similar allowance to yourself but not sure if that's true

Being paid an allowance lowers the substantiation requirement. Ie Not required to keep receipts. It doesn't make much difference really given the need to have actually incurred an expense that is claimed.

 

[Spongbob]

A similar query was raised on AFF in 2014 (http://www.australianfrequentflyer....ax-deduction-points-purchased-used-61069.html). The replies were likewise ambiguous.

Airlines - such as Qantas - have a set value for a FF point, which can be calculated by the notional dollar value of any points give-away prizes. For example, the QF 2014 "1 million points competition" had a notional value of $22,844.50 for the prize, which by my calculation is $0.0228 per point. This would value a QF RTW award in business (280k points) at only $6,384.00.

 

[JohnM]

On a slightly similar vein: if your work paid for a Y fare to somewhere for business purposes and you chose to pay the difference to purchase a J fare, is the difference tax deductible?

 

[andye]

On a slightly similar vein: if your work paid for a Y fare to somewhere for business purposes and you chose to pay the difference to purchase a J fare, is the difference tax deductible?

I have done this and been advised that it was OK (usual disclaimers)

 

[andye]

A similar query was raised on AFF in 2014 (http://www.australianfrequentflyer....ax-deduction-points-purchased-used-61069.html). The replies were likewise ambiguous.

Airlines - such as Qantas - have a set value for a FF point, which can be calculated by the notional dollar value of any points give-away prizes. For example, the QF 2014 "1 million points competition" had a notional value of $22,844.50 for the prize, which by my calculation is $0.0228 per point. This would value a QF RTW award in business (280k points) at only $6,384.00.

Bought points would seem to represent an incurred expense so would have some logic to it

 

[medhead]

Bought points would seem to represent an incurred expense so would have some logic to it

That post isn't about purchased points.