Private ruling: Deduction for Toastmaster fees
Published: June 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to a deduction for Toastmaster fees? | A1: No.

Relevant facts and circumstances: You are an employee and your duties include meeting with clients, holding meetings, presenting in-house training sessions and presenting solutions to clients. It is important that you have the confidence to deal with clients and make presentations in a confident manner. You joined the Toastmasters in order to gain this confidence and improve your competence in making presentations. You attend their meetings twice a month and your employer encourages your participation. You pay an annual membership fee. Toastmasters is an organisation that focuses on communication and leadership development and helps people to learn skills to speak to large and small groups, and one-to-one. It gives their members the skills and confidence to effectively express themselves in any situation.

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 or are necessarily incurred in carrying on a business for the purpose of 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. Taxation Ruling TR 98/9 discusses circumstances in which 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 self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction. At paragraph 42, TR 98/9 states that if a course of study is too general in terms of the taxpayer's current income-earning activities, the necessary connection between the self-education expense and the income-earning activity does not exist. The cost of self-improvement or personal development courses is generally not allowable. To determine whether circumstances exist which would support the deduction for a personal development course we must look to the 'essential character' of the expenditure to see whether there is a sufficient nexus between the expenditure and the taxpayer's income-earning activities. In Case U101 87 ATC 616 ( Case U101 ) and Naglost v. FC of T (2001) 2002 ATC 2008; (2001) 49 ATR 1028 ( Naglost Case ), the Administrative Appeals Tribunal (AAT) considered the deductibility of expenditure on personal development courses. Case U101 concerned a taxpayer who was employed as a Taxation Office inspector. He undertook a course on communication, clear self-expression and work organisation. The course was not formally recommended or encouraged by his employer but the taxpayer considered it would assist him to carry out his work more efficiently. The AAT denied the claim and held that there was not a sufficient nexus between the expenditure in pursuing the course and the taxpayer's employment. Conversely, in Naglost Case the AAT allowed a partial deduction to a serving member of the Royal Australian Air Force (RAAF) who undertook a course of study at 'Mastery University'. The taxpayer's duties included management responsibilities and the course of study was designed to enhance leadership, management capabilities and decision-making processes. Further, the course was approved by the taxpayer's employer and some expenses were reimbursed by the RAAF. The AAT held that the expenditure was allowable as it was considered to be directly relevant to the taxpayer's income producing activity as a manager. The taxpayer had direct management responsibility for a group of 20 to 25 people and was responsible for the unit's physical training, plus occupational health and safety. By applying the principles as established in the above cases to your case, it is considered that the expenses associated with being a member of Toastmasters are not themselves directly attributable to the derivation of your assessable income. The knowledge that you gained from participating in Toastmasters may result in an improvement in your self-confidence and thereby allow you to develop as a better communicator. It may also be of assistance to you in the performance of your income-earning activities. It is equally true to say that virtually any experience and the acquisition of any knowledge will contribute to the individual's own development with consequent benefit to the employment duties. There are many experiences which would help in improving your self-confidence and presentation skills, yet expenses incurred in acquiring this knowledge and experience do not become expenses incurred in gaining your assessable income. Your involvement with Toastmasters is designed to improve self-confidence and is largely personal and private in nature. As such, it is considered to be a self-improvement undertaking and too general in terms of your current income-earning activities. Accordingly, the expenses associated for being a member of Toastmasters are considered to be related to development of personal capacity which is considered to be private in nature and therefore not deductible under section 8-1 of the ITAA 1997.

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