Private ruling: Deductible expenses
Date of advice: 4 December 2015
Published: February 2016
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Question and answer: | Are you entitled to a deduction for unpaid leave? | No.

Relevant facts and circumstances: You were employed by an educational institution. Your employment position was terminated on the grounds of redundancy. Prior to the termination of your employment you travelled overseas to attend a conference. Your employer refused to grant you paid leave for your overseas trip. The result of you not being granted paid leave was that your redundancy payout was reduced.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Detailed Reasoning - Deductions: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all expenditure to the extent to which they are incurred in gaining or producing assessable income. However, you cannot deduct a loss or outgoing if it is capital, private or domestic in nature or incurred in relation to gaining or producing exempt income. In order to be entitled to a deduction, you must have first incurred the expenditure. In your case , you have not received an amount of income due to your employer not granting you paid leave to attend an overseas conference. In this instance, an expense has not been incurred; rather this is a case of a lost opportunity to earn assessable income. A lost opportunity to earn assessable income is not an expense and therefore not deductible under section 8-1 of the ITAA 1997. Accordingly, you are not entitled to a deduction for unpaid leave under section 8-1 of the ITAA 1997.