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Authorisation Number: 1012140512012

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Subject: Deduction for travel expenses

Question 1

Are you entitled to a deduction for travel expenses incurred in undertaking an internship?

Answer

Yes

This ruling applies for the following periods:

Year ended 30 June 2012

Year ended 30 June 2013

The scheme commences on:

01 July 2011

Relevant facts and circumstances

You work as an events coordinator.

You have successfully applied for an internship with a similar overseas organisation with their events programming specialist. You will use this to develop an understanding of their services and events management, which is the area that you work in.

The period of the internship is in 2012 and you will be taking paid recreation leave to attend. You will not be receiving any payment from host organisation or financial support from your employer.

You will be travelling alone and while overseas and you will rent suitable accommodation being an apartment or a room in share accommodation.

Your employer has supported your participation in the internship and says it will provide invaluable to both your personal professional development and to the enhancement of the skills you will bring to your work team.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 subdivision 900E

Income Tax Assessment Act 1997 subdivision 900F

Reasons for decision

As an employee you are able to claim an employment expense and you must show that the expenditure is deductible under paragraph 8-1(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997), and that the expenditure does not fall within the exclusion provisions of subsection 8-1(2) of the ITAA 1997 as expenditure of a private or domestic nature.

An employment expense is allowable as a deduction if the expense:

· is actually incurred;

· meets the deductibility tests; and

· satisfies the substantiation rules.

Taxation Ruling TR98/9 sets out a number of general principles relating to the deductibility of self-education expenses under subsection 8-1(1) of the ITAA 1997.

Taxation Ruling TR 98/9 discusses the deductibility of self-education expenses. It says a deduction is allowable for self-education expenses if:

· a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and

· the subject of the self-education enables the taxpayer to maintain or improve that skill or knowledge (Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348).

Relevant matters to consider are:

· whether the 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.

If the subject of self-education leads to, or is likely to lead to, an increase in the taxpayer's income from current income-earning activities.

· the intention or purpose of the taxpayer in incurring the expense including whether a non-income producing purpose was the dominant purpose for incurring the expense.

In your case you are employed as an events coordinator with your employer and have worked on many events where you have demonstrated skills to take a project from conception to delivery.

Your intention is to travel overseas for the purpose of participating in an internship with a similar organisation with their events programming specialist. This work will contribute to your personal professional development and enhance the skills you will bring to employer.

There is a nexus between the work you do and the type of experience and skills you will gain from your participation in the internship.

You are entitled to a deduction for your expenses associated with your internship and this would include your travel, accommodation and meal expenses.