Edited version of private ruling

Authorisation Number: 1011598982916

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Ruling

Subject: Self education expenses

1. Can you claim a deduction for a portion of the costs incurred for travel, accommodation and meals for your overseas holiday?

No.

2. Can you claim a deduction for costs incurred for museum entry fees? 

Yes.

3. Can you claim a deduction for costs incurred for photographs and resources to the extent they are used in your income-earning activities?

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 by a museum.

Your duties include collection management, administration and exhibit design.

While on annual leave, you travelled overseas for a holiday.

While away you visited several museums, both for personal development and for pleasure.

You took notes and photographs of exhibitions and the interpretation techniques being used in a variety of museums, gathering ideas on exhibitions and designs, public programs, publications and interactive displays.

You had to pay for entry into some of the museums and you took photographs and notes.

Since returning to Australia, you have used the information gathered in your employment and have implemented some of the techniques in your daily work.

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 nature.

To satisfy the first limb of section 8-1 of the ITAA 1997, a loss or outgoing must be relevant and incidental to the operations or activities from which assessable income is produced: Ronpibon Tin N.L.Tongkah Compound N.L. v. Federal Commissioner of Taxation (1949) 78 CLR 47; (1949) 8 ATD 431; (1949) 4 AITR 236. This principle is also expressed in terms of there having to be a sufficient nexus or connection between the outgoing and the production of assessable income.

What is involved is a process of identifying the essential character of the expenditure to determine whether it is in reality an outgoing incurred in gaining or producing assessable income.

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.

However, TR 98/9 explains that if the subject of the self-education is too general in terms of the taxpayer's income-earning activities, the necessary connection between the expense and the income-earning activity does not exist.

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.

In Case U 109 87 ATC 657, 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 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 not deductible.

In your case, you have stated that the reason for your overseas travel was for a holiday, which is a private purpose. You travelled while on annual leave and were not reimbursed for your travel expenses by your employer. Your travel was not for a work-related purpose. Therefore, the costs you incurred for travel, accommodation and meals are private in nature and not deductible.

Museum entries

In your case, while overseas, you visited several museums for both personal development and pleasure. You took notes and photographs of exhibitions and the interpretation techniques being used in a variety of museums, gathering ideas on exhibitions and designs, public programs, publications and interactive displays to use in your role. It is accepted that there is a nexus between the expenses incurred to visit these museums and your current income-earning activities. Therefore, the expenses incurred for entry fees to the museums are deductible under section 8-1 of the ITAA 1997.

Photographs and resources

The deductibility of photographs was considered by the No. 2 Board of Review in Case Q122 83 ATC 732; 27 CTBR (NS) Case 50. In this case a deduction was allowable for the cost of slides taken on the trip as they were used primarily as a teaching aid. Accordingly, costs incurred for the processing of photographs or any purchased resources are deductible to the extent they are used in your income-earning activities. 

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