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Edited version of private ruling
Authorisation Number: 1011634905066
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Ruling
Subject: Work related expenses
1. Are you entitled to a deduction for the internet charges, video games, books, figurines and cinema tickets or for the decline in value of the computer hardware?
No.
2. Are you entitled to a deduction for the train fare to attend an awards presentation?
No.
This ruling applies for the following period
Year ended 30 June 2010
The scheme commenced on
1 July 2009
Relevant facts
You are an artist working full time.
You have purchased video games, figurines, books on animal and human anatomy in order to continue to develop your skills.
You have had a computer built to your specific needs and also purchased monitors additional equipment.
The video games have specific elements in modelling characters, movement, scenes and story integration that you were interested in.
The anatomical books were essential in ensuring that you model human and animal characters correctly.
You need substantial internet download. Therefore, as the landline is in another persons name, you pay them half the cost of the internet charges.
As a graduate in the field of digital animation and special effects in games, movies and commercials, you are developing an interest in work in the games area. You have worked on producing some and you hope to specialise in this area.
When you complete models, you use them to send overseas to showcase your ability and hopefully generate work from it.
You attended an awards presentation acting as an unpaid usher.
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 nature.
Self education expenses generally fall for consideration under section 8-1 of the ITAA 1997.
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.
A deduction for self education expenses will not be allowable if the study is to enable the taxpayer to gain employment or open up a new income earning activity (FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541). This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. This is because the expenses are seen to be incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.
In your case, you are employed full time as an artist. You have purchased a computer, monitor and other equipment as well as video games, books, figurines and you have seen movies at the cinema.
While it is accepted that practicing may make you a better artist, it is considered that the primary purpose for the practice is to allow you to create a body of work to showcase your ability to get work in the future. Additionally, it is not considered that the additional equipment would assist you in developing your skills in your work.
It is also considered that by their nature, computer games, toy figurines and cinema tickets are primarily an entertainment expense. It is accepted that these may to some extent, assist you in your work. However, the expenses are not sufficiently connected to earning your current assessable income. The expenses are considered to be private in nature.
Therefore, you are not entitled to a deduction the internet charges, video games, books, figurines and cinema tickets or for the decline in value of the computer hardware as it is considered that insufficient nexus exists between the expense and your current income producing activities.
Are you entitled to a deduction for the train fare to attend awards presentation?
The cost of attending the award presentations is considered to be a private expense as there would be little or no benefit to you in enabling you to carry out your employment duties. Therefore, you are not entitled to a deduction for the cost of the return travel to the event.
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