Edited version of private ruling

Authorisation Number: 1011499646195

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Ruling

Subject: overseas travel expenses

Are you entitled to a deduction for travel expenses in relation to your trip overseas?

No.

This ruling applies for the following period:

Year ended 30 June 2010

The scheme commenced on:

1 July 2009

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are a teacher.

You are travelling overseas on an unpaid voluntary placement to teach.

You state that your trip will improve your understanding of the subjects you teach at school.

You have paid for the teaching placement, accommodation and travel insurance in the 2009-10 income year.

You will pay for your vaccinations, visa and airfare in the 2010-11 income year.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Summary

It is considered that an insufficient connection exists between your trip overseas and your current income-earning activities. Accordingly, the costs in relation to your trip are not allowable deductions.

Detailed reasoning

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 nature. 

Taxation Ruling TR 98/9 provides the Commissioner's view on the deductibility of self-education expenses. It states that self-education expenses are incurred in gaining or producing assessable income if they are directly relevant to the person's employment activities or are likely to lead to an increase in income from those activities.

The ruling also states that the intention or purpose in incurring an expense can be an element in determining whether the whole or part of the expense is an allowable deduction.

Taxation Ruling IT 2198 deals with allowable deductions for voluntary expenditure incurred by employee taxpayers. Paragraph 13 states that the Taxation Boards of Review have seen a number of teachers seeking income tax deductions for overseas travelling expenses. Most of the claims were rejected because the teachers were not able to establish a positive connection between the overseas travel and the performance of their duties of employment as teachers. In the ultimate the claims have been based on a general proposition that the overseas travel has made the taxpayers better able to carry out their duties which, of itself, is not sufficient to enable the expenditure to be allowed as a deduction

One particular case is Case U109 87 ATC 657. In this case, the taxpayer was a science teacher who specialised in geology and was the head of the school science department. He undertook a 17 day trip to Indonesia organised by a natural museum history society of which he was a member. During the course of the trip, he visited several volcanoes and other geological sites, and attended a geological congress. He also visited some tourist attractions. The taxpayer took many slides of the geological sites and prepared a taped commentary which he used in his teaching on his return. The Administrative Appeals Tribunal (AAT) concluded that the trip was essentially recreational in character and the expenses were not deductible. The AAT also stated that some taxpayers are fortunate in finding personal and recreational satisfaction in their field of endeavour and that in this case the trip was recreational in character and the expenses were not deductible.

The circumstances of your case can be compared to the above decision. The trip may enable you to have first hand knowledge which would benefit you as a teacher. However, the courts have held that this reason alone is not enough to demonstrate a sufficient connection between the travel and the income-producing activities. The knowledge that you will gain is too general in nature for the expenses to be incurred in the course of gaining your assessable income as a teacher. Your trip is seen to be predominantly recreational in nature and as such no deduction can be claimed for the overseas trip as there is insufficient connection between the outgoing incurred and the gaining of assessable income.

Therefore, you are not entitled to a deduction under section 8-1 of the ITAA 1997 for your travel expenses overseas.

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