Private ruling: Professional development deductions for overseas travel expense
Date of advice: 19 March 2020
Published: May 2020
Ruling period: 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Are travel costs for a secondary school visual arts teacher, related to a self-paced tour of European galleries, museums and other places of cultural and historical significance deductable as a work-related professional development expense? | A1: No

Relevant facts and circumstances: You have been an educator for 40 years. You are currently employed at XXX XXX XXX School as a visual art teacher. You travelled to Country X with your spouse for a number of weeks in XX XXXX 2018. Your self-paced tour included a number of museums, galleries, churches, landmarks and guided tours. Your costs included flights, accommodation, meals, general travel (including tour bus travel) and entry fees to museums, galleries and significant historical sites. You state the purpose of your trip was to incorporate the factual information and resources you gained from this trip into your teaching program under the State Y Curriculum and National Curriculum. Since your return, you incorporated a visual art project with your secondary art classes which you feel has reflected an appreciation of Public Art and the works and skills of master artisans with your students. You feel your observations of historical artwork in both exhibitions and settings in the contemporary art scene in Country X led to you overseeing the installation of a school-based sculpture.

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 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. Most self-education expenses are incurred voluntarily and to be allowable under section 8-1of the ITAA 1997, the expenditure must be characterised as having been incurred in gaining or producing assessable income ( Fletcher & Ors v. Federal Commissioner of Taxation T 91 ATC 4950 at 4957). Ronpibon Tin N. L v. Federal Commissioner of Taxation (1949) 78 CLR 47 Dixon J at p56 indicated that the character of the expenditure is relevant and incidental to the gaining or producing of assessable income. Case Q57ATC 307 involved an art teacher who travelled to Greece and Crete to update her knowledge and to keep abreast of art concepts so as to maintain and improve the quality and content of the subject she taught. The Board of Review found that the costs associated with the travel were not incurred by the taxpayer in the process of carrying out her duties as a teacher. 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 Case R94 84 ATC 628 a college librarian was disallowed overseas travel expenses in making a study tour of China organised by the Library Association. The benefits derived by the taxpayer might have made her a better librarian, but the nexus between the outgoings and deriving assessable income was too remote. The taxpayer voluntarily made the trip and the expenditure was essentially of a private nature. In Case R60, 84 ATC 447 the Board of Review disallowed self-education expenses. The taxpayer was a public servant and their position required relevant experience or some legal training (which the taxpayer already had) but not legal qualifications as such. In the circumstances, the continuation of the taxpayer's legal studies could not be characterised as a relevant incident of or as part and parcel of his employment. While the legal studies were specified as an advantage for the position held by the taxpayer and the taxpayer's legal training was relied on by the branch he was in, if the studies were discontinued, the branch would not have reacted at all. The branch head saw the encouragement given to the taxpayer as part and parcel of normal staff development. In your case, the expenses you incur in respect of your overseas trip are considered private are not allowable as a self-education expense. The connection between the knowledge gained on your trip is considered too general in nature and lacks the sufficient connection with your employment duties. It was not a requirement of your employment that you undertook the travel and you did so voluntarily.