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Edited version of private advice
Authorisation Number: 1012641476893
Ruling
Subject: Self-education and mobile phone
Question 1
Are you entitled to a deduction for self-education expenses?
Answer
Yes.
Question 2
Are you entitled to a deduction for mobile phone expenses?
Answer
No.
Question 3
If your employer pays you an allowance for the business use of your mobile phone, is the allowance assessable?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2014
The scheme commenced on
1 July 2013
Relevant facts
You are a graduate and commenced work in early 2014.
Your employer is paying for a Diploma course in your occupational field.
You will incur expenses for books and stationery.
You have a mobile phone which is under a monthly plan and gives you unlimited phone and texts and has a download allowance.
Your mobile phone plan commenced in mid-2013 and has not changed because of your work use.
The calls and texts you use the phone for are mainly private calls and texts. You also use the phone to download work documents and send and receive work emails.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Income Tax Assessment Act 1997 Section 15-2
Reasons for decision
Books and stationery
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.
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).
In your case, it is accepted that the degree will maintain or enhance the skills that are required in the performance of your current employment duties. Consequently the self-education expenses incurred have the necessary and relevant connection with the earning of your assessable income and are therefore deductible.
Mobile phone
In establishing a connection with your assessable income, it must be shown that the outgoing is relevant and incidental to the gaining of assessable income.
While we accept that you use your mobile phone for work related purposes for downloads and emails, it is clear that you are not incurring additional costs in relation to that use. Therefore, the outgoing for the mobile phone remains private in nature and no part of the cost of the plan for the phone is deductible.
Allowance
Section 15-2 of the ITAA 1997 states that your assessable income includes the value to you of all allowances, gratuities, compensation, benefits, bonuses and premiums provided to you in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by you.
Therefore, the allowance your employer may give you would be assessable but this would not change the deductibility of the phone expenses.