Private ruling: work-related expenses
Published: December 2011
Ruling period: Year ending 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Are the expenses you incurred in undertaking a medical, industry specific training courses, and associated costs for travel and accommodation allowable as work related deductions? | A1: No.

Relevant facts and circumstances: You were a self employed carpenter. You were offered a position with a labour hire company (the company). You accepted the offer of employment with the company and commenced work at a later date. As a prerequisite to entering and working at the worksite you were required to undertake a medical and drug screen which you paid for. You also attended and successfully completed two courses which you paid for. You have provided a copy of your Statement of Completion and Statement of Attainment for successfully completing the two courses. You have also incurred costs for travel and 3 night's accommodation. You were required to take you current documentation with you on your first shift. You may have been sent home without pay if you had attended without this information.

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. Taxation Ruling TR 98/9 outlines the deductibility of self-education expenses. Self-education expenses are deductible under section 8-1 where they have a relevant connection to the taxpayer's current income-earning activities. The Ruling states that a deduction is allowable for self-education expenses if: · a taxpayer's income earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge, or · the study leads to, or is likely to lead to, an increase in a taxpayer's income from his or her current income earning activities in the future. However, no deduction is allowable for self-education expenses if the study is to enable a taxpayer to get employment, to obtain new employment or to open up a new income-earning activity (whether in business or in the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. In your case, you were a self employed and were offered a position with a labour hire company. You accepted the position and as a prerequisite to entering and working at the worksite you were required to undertake a medical, drug screen, and two industry courses. You were responsible to pay for all costs and you did not receive any reimbursement from the company. Although the medical, drug screen and the successful completion of the courses was necessary for employment into the industry the expenses are outgoings that precede the earning of assessable income and were incurred to obtain new employment. Therefore, the expenses were incurred at a point too soon to be regarded as incurred in gaining or producing your assessable income and are not deductible under section 8-1 of the ITAA 1997.

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