Edited version of private ruling

Authorisation Number: 1011672581140

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Ruling

Subject: Work related self education expenses

Are you entitled to a deduction for the cost of your travel to and around Country A of an amount?

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 as a teacher at a school.

You travelled to Country A.

You incurred expenses on your trip to Country A, of which you estimate a percentage relates to your teaching.

Some of your receipts are in Country A dollars, and you are claiming them on a dollar for dollar basis with the Australian dollar.

The main purpose of your travel was to experience the culture and geography of Country A.

Your employer did not request that you travel to Country A.

You did not receive any travel allowance or reimbursement of travel expenses from your employer.

You took leave while you were travelling in Country A.

You have kept a diary of the activities you undertook each day and then added notes as to how these experiences have been applied in the course of your teachings.

Your current employment duties include teaching students. The syllabus you teach includes a case study of Country A.

You presented a paper on your observations to your colleagues in your faculty.

Relevant legislative provisions

Section 8-1 of the Income Tax Assessment Act 1997

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that in order for an expense to be deductible there must be a connection between the expense and the gaining or producing of assessable income. However, expenses that are private and domestic in nature are not deductible.

Taxation Ruling TR 98/9 details our view on the deductibility of self education expenses. Essentially, self-education expenses are deductible under section 8-1 of the ITAA 1997 where they have a relevant connection to the taxpayer's current income earning activities.

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.

Therefore, it is necessary to determine the connection between the self education expense and the means by which the taxpayer produces their assessable income. Whether there is a connection is a question of fact to be determined with reference to all the surrounding circumstances.

In some cases, expenses may have both an income producing purpose and a private purpose. TR 98/9 provides examples where apportionment of self education expenses is appropriate when the expense was incurred for mixed purposes.

In your case, the main purpose of your trip was to experience the culture and geography of Country A. The syllabus you teach includes a case study of Country A. You also presented a paper on your observations to your colleagues in your faculty.

You have provided a travel diary which details the activities you undertook while in Country A and how these relate to your teaching duties. You have also stated that you have receipts for the amount of your claim.

Some of your expenses are in American dollars, which you have claimed on a dollar for dollar basis with the Australian dollar. In the absence of a calculation using the exchange rates prevailing at the time, we consider this to be reasonable.

Further, you estimate an amount of your travel expenses to and around Country A relate to your income earning activities as you have stated that a percentage of your trip was related to the earning of your assessable income. We consider that based on your travel diary and other information submitted about your occupation, that this percentage is reasonable.

It is considered the nominated percentage of the activities undertaken in Country A have helped you to improve or maintain your knowledge and skills exercised in your income earning activities as a teacher. Therefore, you are entitled to a claim a deduction for work related self education expenses pursuant to section 8-1 of the ITAA 1997.

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