Edited version of private ruling

Authorisation Number: 1011477920838

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Ruling

Subject: Deductions

Question and answers:

Are you entitled to a deduction for meal expenses incurred in the course of attending work related training?

Yes.

Are you entitled to a deduction for accommodation expenses incurred in the course of attending work related training?

Yes.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

You are employed full time as a pilot.

You are qualified to fly a certain type of aircraft.

In this financial year, you undertook training that would enable you to fly a bigger aircraft.

The training was provided by your employer and held interstate.

Your employer encouraged you to attend the training course by not only providing the course but also by allowing you to attend the training during work hours, fully paid.

The completion of this training will lead to or is likely to lead to an increase in your pay rate (income) due to the aircraft's capacity to remain in the air for longer.

When you attended the training course you were often required to stay overnight and on some occasions for several days.

While attending the course you have incurred accommodation and meal expenses.

Your employer has not reimbursed you for the expenditure that you have incurred or paid you an allowance.

You have all invoices and receipts relating to the accommodation and meal expenses incurred.

Relevant legislative provisions

Income Tax Assessment Act 1997, Section 8-1

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic in nature, or relate to the earning of exempt income.

The cost of meals or accommodation is generally a non-deductible private expense unless the occasion of the outgoing gives the expenditure the essential character of a working expense, as in expenditure incurred while travelling away from home on work.

Taxation Ruling TR 98/9, discusses the deductibility self education expenses and states:

13. If a taxpayer's income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction.

14. If the study of a subject of self-education objectively leads to, or is likely to lead to, an increase in a taxpayer's income from his or her current income-earning activities in the future, the self-education expenses are allowable as a deduction.

TR 98/9 also discusses the deductibility of meal and accommodation expenses when attending work related training courses or conferences and states:

89. Where a taxpayer is away from home overnight in connection with a self-education activity, accommodation and meals expenses incurred are deductible under section 8-1. (Examples include an overseas study tour or sabbatical, a work-related conference or seminar or attending an educational institution.) They are part of the necessary cost of participating in the tour or attending the conference, the seminar or the educational institution. We do not consider such expenditure to be of a private nature because its occasion is the taxpayer's travel away from home on income-producing activities.

In your case, you attended an interstate training course run by your employer that enables you to fly a larger aircraft to what you are currently qualified to fly. The completion of this course has enabled you to improve your skills and knowledge as an aircraft pilot and is likely to lead to an increase in your income from your current income earning activities as a pilot because the larger aircraft remains in the air for longer therefore increasing your pay rate.

When undertaking this training, you have incurred meal and accommodation expenses. These expenses are viewed as part of the necessary cost of attending the training course and therefore are not considered to be private or domestic in nature.

Accordingly, you are entitled to a deduction for accommodation and meal expenses incurred when attending this training course, under section 8-1 of the ITAA 1997.

Further information

Substantiation

Division 900 of the ITAA 1997 sets out the substantiation requirements when claiming work related travel expenses. Substantiation means that although a taxpayer may have fulfilled the technical requirements for deductibility (such as the expense being directly related to the production of assessable income under section 8-1 of the ITAA 1997), a deduction will be denied unless the taxpayer can provide evidence that the relevant expenditure was actually incurred by obtaining and keeping written evidence for expenses as required under the substantiation provisions.

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