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Ruling

Subject: Self-education expenses - overseas travel

Question

Are you entitled to a deduction for your overseas travel expenses?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 2011

The scheme commenced on:

1 July 2010

Relevant facts and circumstances

You are a teacher.

You travelled on a tour overseas.

The tour was organised by a travel agent.

Other high school teachers from various schools also went on the tour.

You believe that teachers are required to develop professionally in their field of teaching through self-development. You believe that one way to achieve this is by attending educational tours to the places you teach about.

Your employer did not require you to take the tour and did not provide you with any travel allowance.

You took unpaid leave to go on the tour.

The tour incorporated many of the geographical and historical sites that are mandatory sections of the subjects that you teach.

The tour enabled you to gain further skills and knowledge in your subject areas and to obtain teaching and learning resources you will use in your employment.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Summary

The skills and knowledge that you gained from your trip overseas are considered too general to be incurred in gaining or producing your assessable income. Accordingly you are not entitled to a deduction for your overseas travel expenses.

Detailed reasoning

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.

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. A deduction is also allowable if the education is likely to lead to an increase in income from your current income earning activities.

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 (Case U109), 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.

Case Q57 ATC 307 (Case Q57) involved an art teacher who travelled to Greece and Crete to update her knowledge and to keep abreast of art concepts so as to maintain and improve the quality and content of the subject she taught. The Board of Review found that the costs associated with the travel were not incurred by the taxpayer in the process of carrying out her duties as a teacher. 

Taxation Ruling IT 2198 deals with allowable deductions for voluntary expenditure incurred by employee taxpayers. Paragraph 13 states that the Taxation Boards of Review have seen a number of teachers seeking income tax deductions for overseas travelling expenses. Most of the claims were rejected because the teachers were not able to establish a positive connection between the overseas travel and the performance of their duties of employment as teachers. In the ultimate the claims have been based on a general proposition that the overseas travel has made the taxpayers better able to carry out their duties which, of itself, is not sufficient to enable the expenditure to be allowed as a deduction.  

In your case, you travelled overseas and visited multiple historic sites. We acknowledge that this trip has broadened your teaching skills and knowledge, and provided learning resources for future teaching. However, these reasons are not enough to demonstrate a sufficient connection between the travel and your income producing activities. Your circumstances are considered similar to Case U109 and Case Q57.

Accordingly your trip is not considered to have a sufficient connection to your employment duties, and you are not entitled to a deduction for expenses incurred in travelling overseas.