Private ruling: Work related expenses
Date of advice: 25 August 2017
Published: December 2017
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Is the taxpayer, a bookstore assistant, entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for expenditure incurred in purchasing books? | A1: No.

Relevant facts and circumstances: You are a bookstore assistant. Your duties require you to assist customers with purchasing books. You have purchased numerous books in a variety of genres to read, to gain a better understanding of the different types of books available, and to enable you to give recommendations to customers. Your employer did not provide any books for you. You are no longer employed as a bookstore assistant.

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

Reasons for decision: Summary: Section 8-1 of the 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. In establishing a connection, it must be shown that the outgoing is relevant and incidental to the gaining of assessable income. In most circumstances the purchasing of books to read would be considered a private expense. In some limited circumstances this expense may be characterised as an income producing expense and may be an allowable deduction, for example a book critic. However, there is an onus on the taxpayer to prove that such an outlay should be an allowable deduction. This was highlighted in Case P30 82 ATC 139; 25 CTBR (NS) 30 Case 94 when the Board of Review disallowed a claim for the purchase of newspapers by a real estate salesman. The real estate salesman would gather information from the daily papers to assist him in selling real estate. The salesman was however, unable to demonstrate that his income was affected by expenditure on the newspapers. The expense retained its private character and the deduction was not allowed. This view is also reiterated in ATO ID 2002/319 which discusses the expenses incurred by a food and beverage analyst to purchase several cases of mixed wine for tasting. Even though the taxpayer was required to maintain their knowledge, the taxpayer was not required by their employer to incur this expenditure. While knowledge acquired from the reading and reviewing of books may assist you to carry out employment duties more efficiently, the expense is not necessarily incurred in order to earn that income. The reading and reviewing of books in the taxpayers own time has the character of a private expense. The connection is too general or tenuous to allow a deduction for any portion of the cost. Accordingly, the taxpayer is not entitled to a deduction under section 8-1 of the ITAA 1997 for the cost incurred in purchasing books.