Rental Expenses: Property Investment Seminar

Dated: March 2004

Question

Is the taxpayer, who derives income from rental properties, entitled to a deduction for expenses incurred in attending a property investment seminar?

 

Answer 

Yes. The taxpayer is entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for expenses incurred in attending a property investment seminar to the extent that the expenses relate to the gaining or producing of assessable income from their rental properties.

 

Example 

Facts:

Suppose the taxpayer incurred expenses, including airfares, accommodation and fees in attending a property investment seminar and workshop. The taxpayer's sole purpose in traveling was to attend the seminar and workshop. The seminar focused on investment strategies and techniques in relation to both commercial and residential properties. The seminar included such topics as developing investment business plans, strategies for dealing with financiers, developers and real estate agents, maximising opportunities for increasing investment property ownership and maximising the return on current investment properties.

 

The seminar was conducted over two days with approximately 20% of the time spent in providing information about the management of rental properties and maximizing rental income. The taxpayer intends to use the information gained about management of rental properties to reduce expenses incurred in relation to their investment properties.

 

Decision:

The proportion of the cost of the seminar that dealt with the management of current rental properties and maximising the income from those investments is incidental and relevant to the taxpayer's current income earning activities and therefore is deductible under section 8-1 of the ITAA 1997. In establishing this connection, the taxpayer was able to point to how they intend to reduce their rental expenses as a result of the information they gained from the seminar.

There must be a reasonable basis for the apportionment of the total cost between deductible and non-deductible components. An apportionment based upon the time spent in the seminar relating to deductible (that is 20%) and non-deductible expenditure (that is 80%), is a reasonable basis for apportionment. Accordingly a deduction for 20% of the total cost in attending the seminar is allowable under subsection 8-1(1) of the ITAA 1997.