Edited version of private ruling

Authorisation Number: 1011476614286

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: Deduction for overseas travel

Question 1

Can you claim a deduction for a portion of your overseas travel expenses as a work related travel expenses?

Answer

No.

Question 2

Are you entitled to claim a deduction for the cost of educational resources purchased while you are overseas?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 2010

Year ended 30 June 2011

The scheme commences on:

1 July 2009

Relevant facts and circumstances:

You are employed as an as a teacher.

You have booked and paid for an overseas trip.

You will undertake the trip in the school holidays.

Your employer did not request you to take the trip.

You are not required to provide a report to your employer on your return.

Your overseas trip is entirely self-funded and you will not be travelling with any friends or family.

You have provided an itinerary detailing the places you will be visiting each day, as well as the costs incurred for the guided tour and airfares paid to the travel agent.

You will present a small gift from your students and school to a small community school located in the overseas country, you have been provided with the name of the head teacher of the school who you will need to ask for when you arrive at the school.

During the trip you will photograph and video cultural, historical and linguistic aspects of the country to use as resources for a unit of study on the overseas country that you are developing, which will be used at your school.

You will develop a set of appropriate slideshows to present to your colleagues, students and members of the school community.

You will use photographs and video taken on your trip to refine and extend your school's ceremonies.

You have provided a list of questions asked by your students about the overseas country. You will be providing the answers to these questions to the students upon your return from the trip.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 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, or relate to the earning of exempt income.

Taxation Ruling TR 98/9 states self-education expenses are allowable as a deduction if your current income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of the self-education enables you to maintain or improve that skill or knowledge.

However, if the subject of the self-education is too general in terms of your income-earning activities, the necessary connection between the self-education expense and the income-earning activity does not exist.

In Case U109 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) examined previous court decisions dealing with teachers who had claimed for the cost of overseas travel. It concluded that although the taxpayer may have been a better teacher because of the travel, this fell short of the sufficient connection required between the travel and their income earning activities. The AAT 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 are travelling overseas on a guided tour and plan to visit a community school as time permits. You have been provided with a list of general questions by your students to answer on your return. Although this trip may broaden your teaching skills and knowledge, the courts have held that these reasons alone are not enough to demonstrate a sufficient connection between the travel and your income producing activities.

Your trip may arguably make you a better teacher, but the knowledge or skills that you will gain from the trip will be too general in nature for the expenses to be incurred in the course of gaining your assessable income as a teacher. The purpose of your trip overseas is essentially private in nature.

Therefore your trip is not considered to have a sufficient connection to your employment duties, and you are not entitled to a deduction for the travel expenses you incur for your overseas trip.

Educational Resources

The deductibility of work related expenses for teachers is discussed in Taxation Ruling TR 95/14. Paragraph 205 of the ruling specifies that teaching aids purchased by teachers to be used in the course of carrying out their duties of employment are deductible to the extent they are not private, domestic or capital in nature.

If an item or article is used for both work-related and other purposes, then the cost must be apportioned and a deduction claimed only for that proportion which is work-related.

The items purchased must have a direct and relevant use in carrying out those duties. Examples of teaching aids in TR 95/14 include stationery, books and items used to conduct classes.

Accordingly, any photography, video costs and any direct costs for developing your slideshow presentations are deductible to the extent they are used in your teaching activities.