Deducting frequent flyer points?

Discussion in 'Accounting & Tax' started by Drgonzo, 12th Jan, 2017.

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  1. Drgonzo

    Drgonzo Well-Known Member

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    if we use points to travel for property purposes, how is this treated as a tax deduction?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    have you incurred any cost?
     
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  3. Mike A

    Mike A Well-Known Member

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    if you use points then the trip hasnt cost you anything. its a freebie provided for past transactions. no cost. no deduction.
     
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  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Maybe better to pay for this and use the points for something else?
     
  5. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Much better to use money for biz trips and get more points to use for personal travel. If you have to pay for taxes etc on the FF trip then I guess you could claim that.
     
  6. Drgonzo

    Drgonzo Well-Known Member

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    Points have a value though but I will take your advice
     
  7. Chilliblue

    Chilliblue Well-Known Member

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    Contact the ATO to attain a definitive answer.
     
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  8. Simon Hampel

    Simon Hampel Founder Staff Member

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    If you believe they have a value, you should be declaring them as income when earned.

    As Terry and Westminster suggested, if you are looking to maximise your deductions, I think it's a much better approach to pay cash when travelling for deductible purposes, and save the points for personal use.
     
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  9. Scott No Mates

    Scott No Mates Well-Known Member

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    Do you declare the FFP as income? Pay FBT on them? Buy them from the airline?

    The only portion of the trip you can claim are those which come out of your pocket eg: Airport taxes etc which aren't covered by the FFP.
     
  10. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    They wont reply - Its not new
     
  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The ATO view is that points are not normally income. However rewards themselves can be. If the nature of the activity used to earn points is from business then a fringe benefit arises but its not taxable to a employee. The issue may be its neither income or a fringe benefit in many instances.

    The ATO policy on assessing as income is here PS LA 2004/4 (GA) - Taxing consumer loyalty program rewards (As at 9 July 2015) which explains their general views. There needs to be a link between certain parties and the arrangements for tax concerns to materialise.
     
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  12. Mike A

    Mike A Well-Known Member

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    Practice Statement PS LA 2004/4 (GA) requires Tax Office staff to apply the principles set out in TR 1999/6 in determining whether a reward received under a consumer loyalty program is an assessable income or a fringe benefit. The Practice Statement also explains at item 5 which cases ATO officers should refer to a senior technical leader for review. The case must be referred where at one of the following criteria exist:

    ● The arrangement is contrived and artificial that it has no commercial purpose other than to allow the recipient to receive the rewards, or

    ● The nature of the arrangement suggests that the rewards are a substitute for income which would otherwise be earned, or

    ● The points accumulated exceed 250,000 points per annum.

    In general term, points accumulated from a business relationship may be questionable when more than 250,000 points are accumulated per annum.
     
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  13. Cactus

    Cactus Well-Known Member

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    Uh oh....

    So I suppose 1M points a year might raise eyebrows...
     
  14. Mike A

    Mike A Well-Known Member

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    it sure will. tax office has some good examples in the practice statement
     
    Last edited: 14th Jan, 2017
  15. Beano

    Beano Well-Known Member

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    If you earn 1m points (and the ATO review above 250k ) perhaps switch to different FF plan where the points are of higher value eg Airpoints points are worth a dollar each lol
     
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  16. Mike A

    Mike A Well-Known Member

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    1m points should allow you to fly to a non extradition country for free :p
     
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