Issue
Whether overseas travel expenses incurred by a teacher of tourism are deductible under section 8-1 ( Income Tax Assessment Act 1997 (ITAA 1997)).
Decision
No. The taxpayer's overseas travel expenses are not deductible as the expenses are not incurred in gaining or producing assessable income.
Facts
The taxpayer is a teacher who taught a 'tourism' subject. Country A was a component of the student's study program for the year. As the taxpayer did not have any practical experience on this subject, the taxpayer undertook a self-improvement study tour of Country A to improve the taxpayer's knowledge level and practical experience. The main purpose of the trip to Country A was to collect and collate tourism data from which worksheets could be compiled for classes.
The taxpayer was not requested by the employer to undertake the trip. There were no allowances, benefits or reimbursements received from the employer in connection with the costs of the trip.
Reasons For Decision
A deduction is allowable for self-education 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 (Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses). ( FC of T v Finn (1961) 106 CLR 60, (1961) 12 ATD 348; Case V74 88 ATC 529, 19 ATR 4321; Case R73 84 ATC 509, 27 CTBR (NS) Case 131 also refer.) Similarly, if the study of a subject of self-education objectively 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, a deduction is allowable (Taxation Ruling TR 98/9).
In the present case, the taxpayer is not a specialist teacher and tourism is only one component of the student's study program for the year. Further, the taxpayer's trip does not increase the likelihood of promotion or increase the taxpayer's income. The fact that the travel undertaken may have made the taxpayer a more efficient teacher does not in itself mean that the expenditure was incurred in gaining or producing assessable income ( Case Q27 83 ATC 125, 26 CTBR (NS) Case 91 ; Case Q86 83 ATC 432, 27 CTBR (NS) Case 14 ; Case Q122 83 ATC 732, 27 CTBR (NS) Case 50 ; Case R47 84 ATC 380, 27 CTBR (NS) Case 101 ).
The deduction is not allowable under section 8-1 (ITAA 1997) due to the insufficient connection between the taxpayer's current income-earning activities and the overseas travel.