When it comes to claiming deductions at tax time, there may be lots of items on your deduction wishlist. A few may qualify as legitimate deductions, but many won't. But if you have an ABN as a sole trader or owner of a company, there are lots more expenses you can deduct. Qantas Frequent Flyer membership – a once-off program joining fee – may be one of them.
Personal tax deductions are limited
Individuals without an ABN can claim work-related expenses as a tax deduction. Common deductions include motor vehicle expenses, laptops, phones, internet, working from home expenses and – yes – travel.
But it would be difficult to justify a Qantas Frequent Flyer program joining fee as a travel expense because it doesn't meet the second of the ATO's work-related expense three "golden" rules: "The expenses must directly relate to earning your income". You could only claim the fee if your employer insisted that you hand over to them any Qantas points you earned while travelling for business, in which case you would expect your employer to reimburse you for the Qantas Frequent Flyer joining fee, and you wouldn't be able to claim a deduction. (ATO golden rule #1: "You must have spent the money yourself and weren't reimbursed".)
Sole traders with an ABN have more tax deductions available
Sole traders who frequently travel by air in order to produce their business income should be able to claim a portion of the Qantas Frequent Flyer program joining fee as a tax deduction. The ATO requires both sole traders and employed individuals with work-related expenses to apportion expenses between personal use and business/work-related use. The recommendation is that you should keep a diary that will allow you to make a correct allocation of the expense.
For example, if a sole trader paid a Qantas Frequent Flyer program joining fee and then purchased eight Qantas air fares for business and two for personal use during the year, they would be able to claim 80% of the joining fee as a tax deduction on the assumption that this pattern would continue in subsequent years. This same method should be applied to even larger Qantas travel expenses, such as a Qantas Club lounge joining fee and annual membership fee, since Qantas Club benefits may be used for both business and personal travel.
Companies are in an even better tax deduction position
Companies should have no problems claiming 100% of employees' Qantas Frequent Flyer joining fees as a legitimate business expense if employees use points earned during business travel to reduce the cost of future business travel. If they allow employees to keep for personal use the points they earn while travelling for business, the fee would count as an employee benefit, still tax deductible but probably assessable for fringe benefits tax.
Best of all, get free Qantas Frequent Flyer membership (so you don't need to claim a deduction)
Why worry about the tax deductibility of Qantas Frequent Flyer membership when you can join the program for free?
Read our informative introduction to Qantas Frequent Flyer for details on how to qualify for a free membership, including choosing a credit card with free QFF membership, or opening a Qantas Travel Money account or Bankwest bank account.
