Edited version of your written advice

Authorisation Number: 1051450033178

Date of advice: 7 November 2018

Ruling

Subject: Work related expenses

Question 1

Are the expenses for the gun range training undertaken overseas deductible?

Answer

No

Question 2

Are the expenses incurred to travel overseas deductible?

Answer

No

Question 3

Are the expenses for the martial arts classes you undertook deductible?

Answer

No

Question 4

Are the expenses for the language courses you undertook deductible?

Answer

No

Question 5

Are the expenses for the rally car and go kart training deductible?

Answer

No

This ruling applies for the following period:

Year ending 30 June 2018

The scheme commences on:

1 July 2017

Relevant facts and circumstances

● You are a Police Officer employed within Australia.

● You have direct contact with the public.

● Your role title was provided.

● Your role scope and description does not include any details regarding fitness, self-defence, gun proficiency, driving proficiency or language skills.

● You holiday overseas annually.

● You consider the availability of your employer’s provided gun range time to be limited.

● You undertook gun range training days at a gun range overseas.

● You sit a requalification test for marksmanship annually.

● You are required to respond to instances of violence and hostility in your employment as a police officer.

● You are required to have self-defence skills.

● You regularly attend martial arts classes.

● You are used as a translator in your role.

● You have undertaken regular language training.

● You are required to respond, by driving, to incidents.

● You undertake driving practice and go kart venues and rally car driver training.

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 or outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent that they are outgoings of a capital, private or domestic nature.

A number of significant court decisions have determined that, for an expense to satisfy the tests outlined in section 8-1 of the ITAA 1997:

● it must have the essential character of an outgoing incurred in gaining assessable income or, in other words of an income-producing expenses (Lunney v FC of T (1958) 100 CLR 478);

● 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)

● 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 (Hatchett's case).

In FC of T v. Cooper 91 ATC 4396; (1991) 21 ATR 1616 (Cooper's case), Hill J said (ATC at 4414; ATR at 1616):

'...the fact that the employee is required, as a term of his employment, to incur particular expenditure does not convert expenditure that is not incurred in the course of the income producing operations into a deductible outgoing.'

A further important consideration may be the taxpayer's subjective purpose in incurring an expense. In the High Court decision of Fletcher v. FC of T 91 ATC 4950; (1991) 22 ATR 613 it was held that subjective purpose may be taken into account, where an expense is voluntarily incurred and the connection between the production of the income and the expense is not objectively clear.

Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses 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; (1961) 8 AITR 406).

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

However, no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to open up a new income earning activity, whether in business or in the taxpayers current employment. Such expenses of self-education are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income (FC of T v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161).

Further Taxation Ruling TR 95/13 Income tax: employee police officers - allowance, reimbursements and work-related deductions discusses deductions as they relate specifically to police officers.

Paragraphs 109-110 of TR 95/13 provide:

109. A deduction is not allowable for fitness expenses as they are considered to be of a private nature. An exception to this general rule applies if a police officer's income-earning activities involve strenuous physical activities on a regular basis.

110. For example, members of special emergency squads, a diving squads, and police officers who work regularly with police dogs and train them may be able to demonstrate that their income-producing activities demand a high level of physical fitness. Similarly, Police Academy physical training instructors may be able to prove that fitness expenses they incur are directly related to their income-producing activities.

Your role description and scope does not entail details requiring the need for specialist fitness skills or training. It is the inherent nature of your job that some level of fitness, gun proficiency and driving proficiency is required and expenses incurred in relation to this is considered to be essentially private in nature.

You have incurred expenses for gun range practice overseas, travel expenses, martial arts classes, driver training and language courses. For these expenses to be allowable they must have a direct connection with your current income earning activities.

You have not provided evidence of a sufficient nexus between these expenses and your role as a police officer. Further your Acting Senior Sergeant was unable to provide support in relation to the nexus of these expenses and your employment as a police officer.

While you may use some of the skills gained during these courses during your duties as a police officer they are largely of a personal and private nature as the training required to undertake your duties is provided by your employer.

Consequently, no deductions are allowed for expenses for gun range practice overseas, travel expenses overseas, martial arts classes, driver training and language courses under section 8-1 of the ITAA 1997.