Private ruling: Work related expenses
Date of advice: 21 July 2020
Published: August 2020
Ruling period: Year ended 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: Q1: Are you entitled to a deduction in relation to seeing an Executive Coach in accordance with section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No.

Relevant facts and circumstances: You are employed as a Consulting Associate. You engaged an Executive Coach (the coach). Your employer did not direct you to engage the coach. The coach provides advice and coaching/training on: - Building a long-term career development plan and milestones to achieve goals, providing advice on problems as they arise and holding me accountable for activities to achieve those goals - Maximising professional effectiveness, especially on networking and building professional relationships, communication, and presentation skills - Managing workload, prioritisation and time management, maintaining and strengthening physical and mental health and building resilience - Understanding and navigating organisational politics, increasing emotional intelligence, assertiveness, negotiation and influencing skills - Managing stress and anxiety - Managing interpersonal conflict in the workplace You engaged with the coach via video calls as the coach is based in overseas. You used your own funds to pay for the services of the coach. Your employer did not reimburse you. Your employer has an 'up or out' approach in which consultants are expected to be promoted to the next level within 2-3 years otherwise they are asked to leave the company.

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 (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. To claim a work-related deduction: - you must have spent the money yourself and were not reimbursed - it must be directly related to earning your income - you must have a record to prove it or explain how you calculated your claim The courts have considered the meaning of 'incurred in gaining or producing assessable income'. In Ronpibon Tin NL Tong Kah Compound NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; 56 ALR 785; 8 ATD 431 the High Court stated that: For expenditure to form an allowable deduction as an outgoing incurred in gaining or producing assessable income it must be incidental and relevant to that end. The words "incurred in gaining or producing the assessable income" mean in the course of gaining or producing such income. In your case, you engaged the services of the coach to assist, support and accelerate your career development. You were not directed by your employer to see the coach. Referring to your position description, the Commissioner deems that your employer provides you sufficient training in order to support your career development. Although you believe the purpose of the engaging the coach may help to improve your income earning activities, this does not change the private nature of the expenses incurred. There is no direct connection between the costs of the coach and the derivation of your income from that employment. You are therefore not entitled to a deduction for the expenses incurred in engaging the coach under section 8-1 of the ITAA 1997 as there is no connection between the expenses and your income producing activities.