Prevention is better than the pain

For medical and pharmaceutical professionals who are planning to attend overseas conferences and claim an entirely tax free holiday, the Australian Taxation Office (ATO) has changed the rules surrounding all work-related deductions, including travel, and failure to comply could cost you.

When planning a conference trip, you can rule out any thought of turning a three-day conference into a two-week vacation and claiming the entire trip as a tax free holiday. The ATO now requires medical practitioners and pharmaceutical professionals to give a greater level of detail for all work- related expenses including airfares, travel and accommodation.

Medical and drug conferences often include a large portion of leisure activities such as sight-seeing tours which could potentially jeopardise deductibility. We are now in an environment where the ATO could potentially review the itinerary of the conference to determine the portion of professional development events, compared to activities that are purely for pleasure.

When submitting tax returns the ATO applies industry-related benchmarking tools to specifically determine if someone is claiming more expenses than they should. Failure to provide adequate justification for work-related expenses could result in an audit and, in some cases, financial penalties.

Preventative measures can be taken to ensure medical and pharmaceutical professionals avoid the pain of an ATO audit related to any tax free holiday activity. While the reporting rules have changed, it shouldn’t discourage medical and pharmaceutical professionals from attending conferences and extending their stay to enjoy a well- deserved holiday.

Our advice is to be prescriptive about keeping receipts and records for all work-related activities which will avoid an adverse diagnosis from the ATO at tax time.

Should you have any questions please contact Litsa Christodulou from HLB Mann Judd Perth’s Business Advisory division.

This article first appeared in the Spring 2019 issue of HLB Mann Judd Perth’s Client Alert.