Tax deductibility of premium cabin travel

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HockeyMonkey

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Hi AFFers,

The company I work for has a quite restrictive international travel reimbursement policy of lowest cost Y fare +$150. Anything above this has to be covered by the employee.

If I chose to travel in J, would the difference be tax deductible as long as I keep a travel diary etc?

I plan to also run this by my accountant at tax time, however thought I’d also run this scenario pst the community.

Could be an efficient way to maintain WP.
 

LadyC

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Assuming the travel is only for work purposes, then if you paid extra to get yourself a ticket in J, it should be tax deductible. As you say, you would need to keep a travel diary to substantiate any work related expenses that you pay for individually.
 

rock86

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Assuming the travel is only for work purposes, then if you paid extra to get yourself a ticket in J, it should be tax deductible. As you say, you would need to keep a travel diary to substantiate any work related expenses that you pay for individually.

Agreed.
 

Sdtravel

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As above yes its a tax deduction. I do the same every year generally from Y to Y+ when we go to the US. Its quite costly for me since i have to pay our corporate travel agent in USD with my ANZ credit card so i get an expensive fare, plus the QF change fee and 3% credit card conversion fee. I know i could use a better card but i dont.

My company generally get letters drawn up saying we are travelling on business for meetings ect addressed to the US CBP as one guy got stopped one time and questioned extensively. Anyway my accountant says this letter is enough to confirm its a work trip and make it tax deductible. So i guess that serves as my log.

All this only reduces your taxable income though. Its not like you get 1:1 back though.
 

timster

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Assuming the travel is only for work purposes, then if you paid extra to get yourself a ticket in J, it should be tax deductible. As you say, you would need to keep a travel diary to substantiate any work related expenses that you pay for individually.

Business need not be the only purpose of a trip on which you claim the cabin upgrade (or indeed the entire fare cost, if your employer covered zilch) for premium cabin travel to/from the business location. The ATO recognizes that business trips often include a private / leisure component. But the private component must be 'incidental' to the overall business purpose of the trip, ie the trip would not have occurred except for the business requirement. If so, you can claim 100% of flight costs you paid, to/from the business location. Obviously 'incidental' can be somewhat subjective - but don't claim 100% fares on a 3-day business trip when you also took a 3 month holiday.
 

eddie 73

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I am a softc*ck and can’t deal with Y or Y+. Also 6’4” and terrible at sleeping on planes.

Was employed 2010-2017, did 3-4 trips p.a , Asia and USA. Company paid Y+ and i topped up the difference, only ever travelling J.

Never a prob with ATO, and I was audited one year.

Now I run my own business, doing same thing, only book J and won’t have issues.

Accountant’s advice is that it is genuine business/work related, therefore ok. Just keep receipts, evidence, travel diary etc, and you’ll be fine.
 

joe7238

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What about if you use points for the work trip upgrade? Would that still be tax deductible? And if so what’s the conversion to $ ?
 

rock86

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What about if you use points for the work trip upgrade? Would that still be tax deductible? And if so what’s the conversion to $ ?

No, it would not.

Currently the ATO treats the vast majority of point earning/usage as an 'ancillary' benefit to an individual. If you're going to start trying to claim your points used in an upgrade as a tax deduction, then conversely you'd also need to include you're points earnt as taxable income.
 

PineappleSkip

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If your trip has a private component that is more than trivial, you would need to apportion the costs between business and private component, which is sometimes a tricky decision. There may also be FBT implications for your employer or company where there is a private component. I get around this by keeping my business trips all business, and my private trips all private.

The ATO can also provide you a free private ruling about what you can claim on a particular trip, which gives you certainty about deductions for that trip, and to an extent other similar ones.

Just a general comment of course and your accountant can advise you in relation to our specific circumstances.

Cheers skip
 

LadyC

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No, it would not.

Currently the ATO treats the vast majority of point earning/usage as an 'ancillary' benefit to an individual. If you're going to start trying to claim your points used in an upgrade as a tax deduction, then conversely you'd also need to include you're points earnt as taxable income.

And that is a whole can of worms best left unopened!
 

andye

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My accountant was happy with a cash upgrade that took me to SG a few years back. Agree not to mention points.
 
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