Edited version of private ruling

Authorisation Number: 1011849477935

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Ruling

Subject: Work related expenses

Question

Are you entitled to claim a deduction for wine purchased in connection with your employment as a tertiary college teacher?

Answer

No

Relevant facts and circumstances

You are employed as a teacher at a tertiary college.

You have provided a letter from your employer stating that you perform the duties of a food and beverage trainer at the college.

This letter states that your primary training role is the delivery of Sommelier training off campus where you deliver a Certificate IV in Hospitality (supervision) with a wine knowledge and wine service focus as well as other alcoholic beverages. You also provide wine knowledge classes for students attending the campus.

Overall the classes involving the demonstration, sampling and delivery of information about wine and other beverages make up 75% of your annual teaching load.

The off campus site and your employer supply some wines for the classes but you purchase additional wines from various regions and grape varieties for wider discussion and training. You are not reimbursed for the cost of the additional wines purchased.

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, or relate to the earning of exempt income.

In establishing a nexus, it must be shown that the outgoing is relevant and incidental to the gaining of assessable income.

In most circumstances the purchasing of wine for the purpose of tasting would be considered a private expense. In some limited circumstances this expense may be characterised as an income-producing expense and may be an allowable deduction. However the onus is on the taxpayer to prove that such an outlay should be an allowable deduction.

This was highlighted in Case P30 25 CTBR (NS); Case 94 82 ATC 139 when the Board of review disallowed a claim for the purchase of newspapers by a real estate salesman. The real estate salesperson would gather information from the daily papers to assist him in selling real estate. The salesperson was however, unable to demonstrate that his income was affected by expenditure on the newspapers. The expense retained its private character and the deduction was not allowed.

In your case, your employer purchases wines for use in the course. While the additional wines purchased by you may assist you to carry out your employment duties more efficiently, it is not considered that the expense has the necessary connection with the derivation of your assessable income. You have not demonstrated that the cost of the wine purchased by you is relevant and incidental to the gaining of your assessable income. Therefore, the connection between the purchase of the wine and the earning of your assessable income is too general or tenuous to allow a deduction for any portion of the cost.

Accordingly, you are not entitled to a deduction under section 8-1 of the ITAA 1997 for the expense incurred in purchasing wine.