Private ruling: Professional development
Date of advice: 15 June 2016
Published: July 2016
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to a deduction for accommodation, airfare, taxi and meal expenses incurred in undertaking professional development overseas? | A1: Yes

Relevant facts and circumstances: You are employed. You took time off without pay from your employer to undertake professional development activities in Town A. The nature of your work means that you work long hours, including weekends, typically having communications with people (internal and external of your employer) who operate in different time zones. As such to undertake the required focus in the professional development and learning you need to be away from your normal work and domestic environment. During your time in Town A, nearly every day, including weekends you worked on research or writing, sometimes this was done in libraries, other times in offices or in cafes. You completed short cut guides for your work, policies and procedures, manuals and guides and presentations etc. Staying in Town A allowed you to meet face to face leading practitioners in your field. You travelled for X days and incurred expenses for accommodation, airfare, taxi and meal expenses.

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

Reasons for decision: Summary: As an employee you are able to claim an employment expense and you must show that the expenditure is deductible under paragraph 8-1(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997), and that the expenditure does not fall within the exclusion provisions of subsection 8-1(2) of the ITAA 1997 as expenditure of a private or domestic nature. An employment expense is allowable as a deduction if the expense: a) is actually incurred; b) meets the deductibility tests; and c) satisfies the substantiation rules. Taxation Ruling TR 98/9 discusses the deductibility of self-education expenses. It says a deduction is allowable for self-education expenses if: a) a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and b) the subject of the self-education enables the taxpayer to maintain or improve that skill or knowledge ( Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348 ( Finn's case)). Relevant matters to consider are: a) whether the 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. b) If the subject of self-education leads to, or is likely to lead to, an increase in the taxpayer's income from current income-earning activities. c) the intention or purpose of the taxpayer in incurring the expense including whether a non-income producing purpose was the dominant purpose for incurring the expense. Where voluntary expenditure is incurred, that is, without the express requirement of the employer, Taxation Ruling IT 2198 Income tax: allowable deductions: expenditure voluntarily incurred by employee taxpayers , provides the Commissioner's view that deductibility of voluntary expenditure will depend on the particular circumstances of the case. Application to your circumstances The accommodation, airfare, taxi and meal expenses you incurred in respect of your professional development activities are deductible under section 8-1 of the ITAA 1997, as your circumstances are similar to those in Finn's case. The expenses you incurred are relevant and incidental to your current income producing activities and the skills and knowledge you gained have been directly applied in your work.