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Edited version of your private ruling
Authorisation Number: 1012600613649
Ruling
Subject: Professional development expenses
Question
Are you entitled to a deduction for planned professional development expenses?
Answer
No
This ruling applies for the following period:
Year ended 30 June 2013
The scheme commences on:
1 July 2012
Relevant facts and circumstances
You are employed as a health professional.
You were approved for a period of leave without pay (LWOP).
The primary purpose of the LWOP was to work as a health professional overseas and further develop and broaden your skills and knowledge.
You intended to apply your skills and knowledge acquired overseas to your role within Australia.
In order to gain registration and practice your qualification overseas you incurred the following costs:
- Scrutiny fee
- Registered mail costs for application
- Passport photograph for application
- University course information form
- medical body membership
You also incurred costs for return flights.
Just before your planned leave commenced your LWOP was revoked.
You were only entitled to your accrued recreation leave.
You were therefore unable to continue with your intention of working overseas.
You travelled overseas and did not work.
You were not reimbursed for any of the costs you incurred.
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.
A number of significant court decisions have determined that for an expense to be an allowable deduction:
n it must have the essential character of an outgoing incurred in gaining assessable income or, in other words, of an income-producing expense (Lunney v. FC of T; (1958) 100 CLR 478),
n there must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income (Ronpibon Tin NL v. FC of T, (1949) 78 CLR 47), and
n it is necessary to determine the connection between the particular outgoing and the operations or activities by which the taxpayer most directly gains or produces his or her assessable income (Charles Moore Co (WA) Pty Ltd v. FC of T, (1956) 95 CLR 344; FC of T v. Hatchett, 71 ATC 4184).
In your case you incurred expenses for proposed travel overseas to work. One of the conditions of section 8-1 is that the expenses must be incurred in the gaining or producing of assessable income and as you incurred the expenses but did not produce any assessable income in relation to these expenses no deduction is allowable. The fact that the work was not undertaken only because your LWOP was revoked does not affect the fact that no assessable income was gained or produced.