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Authorisation Number: 1012149001021

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Ruling

Subject: Work related expenses

Questions and answers:

Are you entitled to a deduction for Vitamins?

No

Are you entitled to a deduction for Pay TV as per usage related to work purposes evidenced by a log book?

Yes

Are you entitled to a deduction for Internet connection and use as per usage related to work purposes evidenced by a log book?

Yes

Are you entitled to a deduction for Home phone use and line rental as per usage related to work purposes evidenced by a log book?

Yes

This ruling applies for the following periods:

Year Ending 30 June 2010

Year Ending 30 June 2011

Year Ending 30 June 2012

Year Ending 30 June 2013

The scheme commences on:

01 July 2009

Relevant facts and circumstances

Your current role includes the following tasks: planning and carrying out operational tasking locally and overseas; giving presentations to superiors on current world situations and giving presentations on proposed improvements to equipment and training; you hold a number of instructor qualification to give lessons, presentations and training to subordinates.

Your line of work is highly demanding both mentally and physically and of an intense nature. You take dietary supplements to maintain your health, especially so when travelling overseas where even normal standard dietary requirements may be hard to obtain.

You use satellite to keep up with news as well as other programs to research, study and assist with creating presentations related to your current duties. You have advised that you can substantiated these expenses through the keeping a log.

You use the internet as a research tool to keep up with news and current affairs used in presentations as well as areas such as professional study and research to ensure that all teachings are relevant and at the leading edge of technology in your field. You have advised that you can substantiate these expenses through the keeping a log.

You need to always be contactable by your superiors. The use of the home phone is for the connection with the internet and also part of the requirement to always be "on call". You also sometimes use your home phone for communications back and forth from work. You have advised that you can substantiate these expenses through the keeping a log.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 51(1)

Income Tax Assessment Act 1936 Section 23AD.

Income Tax Assessment Act 1997 Section 8-1.

Income Tax Assessment Act 1997 Section 6-5.

Income Tax Assessment Act 1997 Section 900

Reasons for decision

Work-related expenses generally fall for consideration under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). Section 8-1 allows a deduction for losses and outgoings which are incurred in the course of gaining or producing assessable income, unless the losses or outgoings are capital, or are of a capital, private or domestic nature, or a provision of the Income Tax Assessment Act 1936 (ITAA 1936) or ITAA 1997 specifically denies a deduction for the losses or outgoings

In addition to the above, most work related expenses must also satisfy the substantiation requirements of Division 900 of the ITAA 1997.

Additionally, expenses incurred in the maintenance of physical fitness and well being are not deductible as they are private and domestic expenditure. The issue as to whether personal fitness costs are deductible has been considered in a number of cases.

 The Full Federal Court considered the deductibility of food costs in Federal Commissioner of Taxation v. Cooper (1991) 21 ATR 1616; 91 ATC 4396 (Cooper's case).  In that case, a professional footballer had been instructed to consume large quantities of food during the off-season to ensure his weight was maintained.  By majority, the Full Federal Court found that the cost of additional food to add to the weight of the taxpayer was not allowable.  Hill J said (ATC at 4414);

'The income-producing activities to be considered in the present case are training for and playing football.  It is for these activities that a professional footballer is paid.  The income-producing activities do not include the taking of food, albeit that unless food is eaten, the player would be unable to play.  Expenditure on food, even as here "additional food" does not form part of expenditure related to the income-producing activities of playing football or training.'

Hill J went on to say (FCR at 201; ATC at 4415; ATR at 1638):

'Food and drink are ordinarily private matters, and the essential character of expenditure on food and drink will ordinarily be private rather than having the character of a working or business expense.  However, the occasion of the outgoing may operate to give to expenditure on food and drink the essential character of a working expense in cases such as those illustrated of work-related entertainment or expenditure incurred while away from home.'

In summary, the Commissioners position is that a deduction for expenses incurred for food supplements will not be allowed as expenditure on additional nutrition is a private expense and is not directly related to your income producing activities and therefore is not an allowable deduction.

Your work related home telephone charges, TV subscriptions and internet expenses can be substantiated by log book records as to their use. These are work related expenses in accordance to section 8-1(a) ITAA97 as they are expenses incurred in generating income. These are allowable deductions subject to the substantiation and apportionment of usage compared to total costs.

TD 95/17 further explains allowable deduction claims in regards to telephone expenses:

Telephone, mobile phone, pager, beeper and other telecommunications equipment expenses: A deduction is not allowable if these items are supplied by the employer. If they are not supplied, a deduction is allowable for the rental cost or for depreciation on the purchase price to the extent of the work-related use of the item.

Cost of calls: A deduction is allowable for the cost of work-related calls

Rental costs: A deduction is allowable for a proportion of telephone rental costs if a ADF member can demonstrate that he or she is 'on call', or required to telephone his or her employer on a regular basis.

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