Income Tax Deductions: cost of managing tax affairs - deductibility of tax return preparation training course

Can the taxpayer claim the cost of a tax return preparation course as a cost of managing the taxpayer's tax affairs under section 25-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Yes. The taxpayer can claim the cost of a tax preparation course as a cost of managing their tax affairs under section 25-5 of the ITAA 1997.

The taxpayer is a wage earner. The taxpayer also carries on some investment activities. The taxpayer attends a tax return preparation course that covers the tax treatment of these investments. The taxpayer's attendance at this course assists in preparing their tax return.

All legislative references are to the ITAA 1997 unless otherwise stated.

Section 25-5 provides that certain tax-related expenses are deductible.

Paragraph 25-5(1)(a) provides that a taxpayer can deduct expenditures they incur to the extent that the expenditure is for managing tax affairs.

The expression 'tax affairs' is defined in section 995-1 as 'affairs relating to tax' but the Act does not define the meaning of 'managing tax affairs'.

It is considered that, for the purposes of section 25-5, managing tax affairs includes activities required to prepare income tax returns.

The taxpayer attends a tax return preparation course which provides information to assist the taxpayer in preparing their tax return. The cost of the tax preparation course is a cost associated with preparing the taxpayer's tax return, and therefore is deductible as a cost of managing their tax affairs under section 25-5.