The Australian Taxation Office perspective on work-related travel expense deductions for academics

Abstract

This paper includes a case study of my own experiences as a personal taxpayer being audited by the Australian Taxation Office (ATO) as well as a legal analysis of Australian tax cases relating to the deductibility of travel-related expenses. The personal case study explains Australia's tax system of Pay As You Go (PAYE) income tax deductions followed by annual tax return submissions (using an honesty-based system) plus occasional subsequent tax audits if deductible expenses claimed in tax returns are deemed excessive. The case describes how the ATO initiated and handled my tax audit in 2013 to 2015 and the arguments put forward by the ATO officers as to why my research-related tax deductions should be disallowed. The next part of the paper reviews the tax law cases in Australia's past which have either allowed or disallowed work-related travel expense deductions. This discussion concludes with the Payne case of 1999 to 2001. Judges have now polarised themselves into two discrete camps, those for deductibility looking at the composite income-earning activities of the taxpayer (viewed in a holistic way) with those against deductibility arguing that travel between two unrelated places of employment or business is equivalent to travel between home and work.