Private ruling: Deduction for overseas travel
Published: October 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to a deduction for the costs incurred for an overseas study tour as self education expenses? | A1: No | Q2: Are you entitled to a deduction for costs incurred for resources purchased while overseas where they are used as teaching aids? | A2: Yes

Relevant facts and circumstances: You are a teacher and you went on an overseas tour and travelled with a group of your colleagues. You travelled during your holidays and you did not receive a travel allowance and was not reimbursed for your expenses. The tour included a visit to a teaching facility, and you gave a presentation relating to your own school and subjects and visited students in their classrooms. You took with you small gifts for teachers and students that you met. The tour was a fully organised trip and included sight seeing. You visited several cities and experienced the different cultures the places had to offer. You incurred the cost of airfares, accommodation, gifts (brought in Australia) and taxes and you also purchased light weight luggage and locks prior to departure. While on the tour you purchased learning aids which you are using everyday in the classroom.

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. Taxation Ruling TR 98/9 states self-education expenses are allowable as a deduction if your current income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of the self-education enables you to maintain or improve that skill or knowledge. A deduction is also allowable if the education is likely to lead to an increase in income from your current income earning activities. However, if the subject of the self-education is too general in terms of your income-earning activities, the necessary connection between the self-education expense and the income-earning activity does not exist. In Case U109 87 ATC 657 ( Case U109 ), the taxpayer was a science teacher who specialised in geology and was the head of the school science department. He undertook a 17 day trip to Indonesia organised by a natural museum history society of which he was a member. During the course of the trip he visited several volcanoes and other geological sites, and attended a geological congress. He also visited some tourist attractions. The taxpayer took many slides of the geological sites and prepared a taped commentary which he used in his teaching on his return. The Administrative Appeals Tribunal (AAT) examined previous court decisions dealing with teachers who had claimed for the cost of overseas travel. It concluded that although the taxpayer may have been a better teacher because of the travel, this fell short of the sufficient connection required between the travel and their income earning activities. The AAT stated that some taxpayers are fortunate in finding personal and recreational satisfaction in their field of endeavour and that in this case the trip was recreational in character and not deductible. Taxation Ruling IT 2198 deals with allowable deductions for voluntary expenditure incurred by employee taxpayers. Paragraph 13 states that the Taxation Boards of Review have seen a number of teachers seeking income tax deductions for overseas travelling expenses. Most of the claims were rejected because the teachers were not able to establish a positive connection between the overseas travel and the performance of their duties of employment as teachers. In the ultimate the claims have been based on a general proposition that the overseas travel has made the taxpayers better able to carry out their duties which, of itself, is not sufficient to enable the expenditure to be allowed as a deduction. In your case, you travelled overseas and visited a school and experienced different cultures in the places that you visited. This trip may have broadened your teaching skills and knowledge, provided resources and may have given you ideas for your teaching and classroom work. However, these reasons are not enough to demonstrate a sufficient connection between the travel and your income producing activities. Your circumstances are considered similar to Case U109 . Furthermore there is no evidence to show that your travel will increase income in your current work activities. Your trip may make you a better teacher, but the knowledge or skills that you gained from the trip are too general in nature for the expenses to be incurred in the course of gaining your assessable income as a teacher. Accordingly your trip is not considered to have a sufficient connection to your employment duties, and you are not entitled to a deduction for expenses incurred in travelling overseas. | Detailed Reasoning - Educational Resources: The deductibility of work related expenses for teachers is discussed in Taxation Ruling TR 95/14. Paragraph 205 of the ruling specifies that teaching aids purchased by teachers to be used in the course of carrying out their duties of employment are deductible to the extent they are not private, domestic or capital in nature. The items purchased must have a direct and relevant use in carrying out those duties. Examples of teaching aids in TR 95/14 include stationery, books and items used to conduct classes.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.