The AAT has denied a taxpayer’s deduction claim for “work related self-education expenses” under s 8-1 of the ITAA 1997 for the 2013 income year.

The taxpayer was employed on a full-time basis as a teacher at a secondary college. He was also enrolled as a part-time student in the then “Postgraduate Diploma in Management” at the University of Melbourne’s Melbourne Business School.

In his 2013 income tax return, the taxpayer returned income totalling $71,268 (including $65,780 earned from his employment) and claimed a deduction for an amount of id=”mce_marker”9,779 for “work related self-education expenses” comprising 6 course fees (id=”mce_marker”9,500), which included Financial Accounting and Marketing ($3,900 each) and related textbooks ($279).

Before the AAT, the Commissioner conceded deductibility for 4 of the courses and related textbooks totalling id=”mce_marker”1,844. Therefore the dispute was confined to the remaining 2 courses (Financial Accounting and Marketing) and the remaining penalty (the Commissioner had earlier reduced the penalty to 18.75% of the shortfall amount).

The AAT held that neither the course expenses as a whole, nor those relating to the disputed subjects, were deductible during the relevant year.  It said the occasion of the outgoings was not found in that which was productive of the taxpayer’s assessable income (ie that being his employment as a classroom teacher).

It also affirmed the Commissioner’s penalty decision and held there were no circumstances arising from the evidence warranting remission beyond that which had already been granted.

In conclusion, the AAT varied the decision under review to allow the deduction conceded by the Commissioner in the amount of id=”mce_marker”1,844 for the 2013 income year.

(Re Ting and FCT [2015] AATA 166, AAT, File No: 2014/5244, Alpins DP, Date of written reasons: 20 March 2015.)

[LTN 56, 24/3/15]

In relation to the taxpayer’s expenses in undertaking the course considered in its entirety, the AAT said that the course was not required as a condition of the taxpayer’s employment, nor was it required in order to fulfil his tasks and duties. Further, given its nature, the course did not improve or maintain the taxpayer’s skills and knowledge as a teacher, rather, it had the more general effect of increasing the likelihood of him being a better teacher, but that connection was too tenuous to make the course expenses deductible.

In relation to the taxpayer’s expenses relating to the particular course subjects in dispute, the AAT said that the taxpayer’s income earning activities did not require skills in financial reporting, nor in marketing, nor did they, or were they likely to, increase income from his classroom teaching.

[IT 24/3/15]