An employee photographer has been denied deductions for travel expenses (when travelling with his family), and other purported work related expenses.
Facts of the case
The tax payer was employed as a photographer by Nationwide News Pty Ltd. For the 2013 income year, claims were made for work-related travel expenses of $3,200 and other work-related expenses in the amount of $10,594. For the 2014 income year, claims were made for work-related travel expenses of $2,800 and other work-related expenses in the amount of $20,295.
The total quantum of claimed deductions attracted the attention of the Commissioner, who conducted audits of the taxpayer’s income tax affairs for the relevant period. The outcome of the audits was that none of the expenses for the relevant period were considered by the Commissioner to be deductible. Notices of amended assessment for each of the income years were issued to the taxpayer, and the Commissioner also issued notices of assessment of shortfall penalties for both years of income.
The taxpayer lodged objections to the amended notices of assessment, arguing that the travel expenses (in relation to a trip to Thailand and a trip to regional Australia where the taxpayer was accompanied by his spouse and two children) were undertaken as part of his job as a photographer, and therefore were deductible as work-related travel. Specifically, he said he made these trips as part of his shooting of stock photographs for his employer, and that his family had to accompany him because they were to act as his models in his photographic work.
However, the objections were disallowed in full by the Commissioner. The Commissioner argued that at no time during the relevant period did the taxpayer declare any business income he may have derived from those trips. In addition, there was absolutely no evidence from the taxpayer’s employer to the effect that the employer asked, stipulated or directed him to incur the costs (whether for himself or his family) of making these trips (and the employer was not subsequently called as a witness). Furthermore, the taxpayer had no invoices or receipts in relation to the other work-related expenses.
The Tribunal agreed with the Commissioner that the travel expenses were primarily incurred for the purposes of a family trip or holiday and were therefore non-deductible, as they were private and domestic in nature. In relation to the reliance the taxpayer attempted to place on bank statements in the absence of invoices and receipts, the Tribunal observed that “evidence of the mere transfer of funds, be it by way of bank transfer or by any other means, is not sufficiently informative of the actual character of an expense. Accordingly, for want of other corroborating evidence, the other disputed expenses cannot be claimed as allowable deductions.” In conclusion, the deduction of those expenses is denied.
It is important that if you are to travel for business and decide to take this opportunity to also include a family holiday, that it is done in the proper manner. It is highly recommended that you demonstrate the true nature of the trip first, by:
- Prior to making any travel arrangements, prepare and confirm any and all business appointments in writing;
- Keep a log of all business activities on this trip, either through a diary or notes;
- Keep receipts of all expenses and track how they were incurred.
If you would like any further information on claiming work-related expense, please do not hesitate to contact our tax accountants at The Quinn Group on (02) 9223 9166 or fill out an online enquiry form today.