Private ruling: Work related expenses - Travel expenses - Overseas
Date of advice: 15 September 2015
Published: September 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to a deduction for expenditure on a trip overseas? | A1: No.

Relevant facts and circumstances: You are a school teacher. You left Australia to travel overseas in the 20XX financial year. You spent time in various countries. You visited a number of historical sites and museums. Your reason for travelling overseas was to obtain information for your students which was not specifically in their textbook(s) and incorporating this information into your lesson material. The travel was also to allow you to investigate the option of bringing students on a school excursion to the places you visited. Your employer did not request that you travel overseas. You took long service leave to travel overseas. You did not receive a travel allowance for the period you were on holiday. You have maintained a travel diary and kept receipts. You were accompanied by other teachers on the trip who will claim their own expenses.

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

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 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. Travel expenses may be deductible where they form part of the taxpayer's self-education expenses. Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business states self-education expenses are allowable as a deduction 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. However, if the subject of the self-education is too general in terms of the taxpayer's income-earning activities, the necessary connection between the self-education expense and the income-earning activity does not exist. You travelled overseas visiting many sites which you consider is relevant to the syllabuses you teach. Although the trip may have broadened your knowledge and benefited you as a teacher, the courts have held that this reason alone is not enough to demonstrate a sufficient connection between the travel and the income producing activities. In Case U109 87 ATC 657, the taxpayer was a science teacher who specialised in geology and was the head of the school science department. He undertook a 17 day trip to Indonesia organised by a natural museum history society of which he was a member. During the course of the trip he visited several volcanoes and other geological sites, and attended a geological congress. He also visited some tourist attractions. The taxpayer took many slides of the geological sites and prepared a taped commentary which he used in his teaching on his return. The Administrative Appeals Tribunal (AAT) examined previous court decisions dealing with teachers who had claimed for the cost of overseas travel. It concluded that the general principle in these cases was that the fact that the taxpayer may have been a better teacher after the travel was not enough to demonstrate a sufficient connection between the travel and their income earning activities. The AAT stated that some taxpayers are fortunate in finding personal and recreational satisfaction in their field of endeavour and that in this case the trip was recreational in character and not deductible. The circumstances of your case can be compared to the above decision, in that, your overseas trip may have assisted you to provide information to your students which was not specifically in the textbook but the knowledge that you gained is too general in nature for the expenses to be incurred in the course of gaining your assessable income as a teacher. Therefore your trip is not considered to have a sufficient connection to the duties of your employment. Accordingly, the expenses you incurred in respect of your overseas trip are not allowable as a self-education expense.