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Ruling

Subject: Course expenses

Question 1

Are you entitled to a deduction for the course fees and the associated airfares, taxi fares and meals and accommodation expenses?

Answer

Yes.

Question 2

Are you entitled to a deduction for your travel insurance, washing and dry cleaning when attending the course?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2012

The scheme commenced on

1 July 2011

Relevant facts

You are an employee of a company.

Your current role relates to marketing.

You attended a marketing course. This course was approved and supported by your employer.

The course provided you with additional knowledge and skills to help with decisions used in your current role.

You incurred the following expenses:

· course fees

· airfares

· taxi fares

· meals and accommodation

· travel insurance

· washing and dry cleaning.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

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.

Taxation Ruling TR 98/9 discusses the circumstances under which self education expenses are allowable as a deduction. 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).

Similarly, if the study of a subject of self education objectively leads to, or is likely to lead to an increase in a taxpayer's income from his or her current income earning activities in the future, a deduction is allowable.

In your case, it is accepted that the course will maintain or enhance the skills that are required in the performance of your current employment duties. Consequently the expenses incurred in undertaking the course have the necessary and relevant connection with the earning of your assessable income and are therefore deductible under section 8-1 of the ITAA 1997.

Expenses incurred for your course fees, airfare, taxi fares, meals and accommodation are allowable deductions under section 8-1 of the ITAA 1997.

Travel insurance and washing/dry cleaning expenses

In Case T78 86 ATC 1094 the Administrative Appeals Tribunal allowed a deduction to a barrister for airfares to attend a work related course. However, his claim for travel insurance was found to be expenditure of a private and domestic nature and therefore not deductible. Travel insurance policies invariably cover items that are generally private in nature, for example, illness, loss of baggage and theft or damage to belongings.

The expense incurred for your travel insurance is not an allowable deduction under section 8-1 of the ITAA 1997 as it is considered to be private in nature.

Similarly, your expenses for washing and dry cleaning are regarded as private in nature and not sufficiently related to your income producing activities. Therefore no deduction is allowable.