Private ruling: Work Related Expenses - Travel
Date of advice: 25 February 2019
Published: May 2019
Ruling period: Year ended 30 June 20ZZ | Year ended 30 June 20YY
Date scheme commenced: 1 July 20XX

Ruling: Q1: Can you claim travel expenses, including airfares, tour costs and meals, in respect to travel to overseas religious sites? | A1: No

Relevant facts and circumstances: You were appointed as a religious Education Teacher. Your tours involved you participating in site seeing, touring, observing and sometimes partaking in religious rituals. You toured Italy accompanied by your parents and siblings. Your tour of Italy saw you visiting local Churches, Parishes, Basilicas, Religious Shrines and tombs of Catholic Saints including St Francis of Assisi. You participated in a guided visit to the Vatican Museums. Your tour also included popular landmarks of Rome such as the Trevi Fountain, Grand Canal and Rialto Bridge. You participated in a tour of Nepal and India with colleagues. During your tour of Nepal and India you visited important Buddhist shrines and holy places. You also visited Hindu sites of significance such as the Ganges River and temples of Varanasi. Places of Islamic importance such as the Taj Mahal in India were visited. Also included in this tour were visits to Chitwan National park, Agra Fort, Amber Fort and the colourful bazaars. You are expected to lead the staff and students in the appreciation and practice of religion. This is achieved through modelling, organising and/or leading religious practices within the College. You additional duties include: ● Scheduled teaching; lesson preparation and programming; assessment; register content taught; reporting. ● Personal and professional learning; collegial support, e.g. the mentoring of trainee and beginning teachers. ● Supervisory duties that can include playground duties, sports duties, as well as other occasions. ● Ongoing care through identifying students in need and taking appropriate and timely action. ● Participation in school based meetings; participation in parent-teacher meetings; participation in school camps/retreats; and participation in the usual co-curricular activities of the College. ● Other duties may require a teacher to take responsibility for leading an area of instruction, participation in the management of school such as undertaking risk assessments, or providing a general assistance to the good management of the College. ● Commit to the development of a climate and culture of the workplace aligned to the ethos of a religious school. ● Understand, demonstrate and use a range of teaching strategies, styles and learning technologies appropriate to year levels and topics taught. You have ambitions to teach religious education within universities in the future.

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. To satisfy the first limb of section 8-1 of the ITAA 1997, the loss or outgoing must be relevant and incidental to the operations or activities from which the assessable income is produced: Ronpibon Tin NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; 8 ATD 431; (1949) 4 AITR 326. This principle is also expressed in terms of there having to be a sufficient nexus or connection between the outgoing and the production of assessable income. Taxation Ruling TR 98/9 sets out the Commissioner's view on self-education expenses. Self-education expenses are deductible if: ● they have a relevant connection to your current income-earning activities ● your income earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables you to maintain or improve that skill or knowledge, and ● the study of a subject of self-education objectively leads to, or is likely to lead to, an increase in your income from your current income-earning activities in the future. However, it should be noted that such a finding is not a prerequisite for deductibility. TR 98/9 also explains that expenses incurred on overseas study tours or sabbaticals, on work-related conferences or seminars, or attending an educational institution are deductible if the necessary connection with a person’s income producing activity exists. However, the ruling also explains that if the subject of the self-education is too general in terms of the taxpayer’s income-earning activities, the necessary connection between the self-education expense and the income earning activity does not exist. The Taxation Boards of Review have seen a number of teachers seeking income tax deductions for overseas travel 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 Case U109 87 ATC 657 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 history museum 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 r equired 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. The circumstances of your travel are similar to travel undertaken in the case noted above. We acknowledge your reasons for undertaking the travel is to enable you to enrich your teaching and understanding as well as enhancing your knowledge of different religions. The trip may broaden your knowledge and benefit you as a teacher. However, the courts have held that these reasons are not enough to demonstrate a sufficient connection between the travel and the income producing activities. Whilst your tours were to sites of significance for different religions, there is little or nothing about the tours that is specifically of interest only to religious education teachers. There are many experiences and places of interest which may be relevant to your employment however this does not automatically mean that the associated expenses are deductible. The knowledge that you will gain would be too general in nature for the expenses to be incurred in the course of gaining your assessable income. It is acknowledged that you toured a number of religious sites of significance relevant to a number of religions, including the Vatican City, Taj Mahal and the birthplace of Gautama Buddha. However our view is that the essential character of the tours was recreational in nature. Therefore your trips are not considered to have a sufficient connection to your duties as a religious education teacher. Accordingly, you are not entitled to deduct expenses incurred in relation to your overseas tour.