ATO Interpretative Decision
ATO ID 2001/330 (Withdrawn)
Income Tax
Deductions - work related expenses incurred while employed overseasFOI status: may be released
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This ATO ID is a simple restatement of the law and does not contain an interpretative decision. It is no longer current due to amendments to section 23AG of the Income Tax Assessment Act 1936 effective from 1 July 2009.This document has changed over time. View its history.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Are work related expenses incurred by a taxpayer who was on a work exchange program in the United Kingdom deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) where the income from employment in the United Kingdom is exempt from tax under section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936)?
Decision
No, work related expenses incurred by the taxpayer while employed in a work exchange program in the United Kingdom relate to exempt income and are not deductible under section 8-1 of the ITAA 1997 unless the expenditure is related to, or provides an enduring benefit to the taxpayer's work in Australia.
Facts
The taxpayer was involved in a work exchange program with an organisation in the United Kingdom. The exchange allowed the taxpayer to undertake similar employment duties overseas to those in their current employment in Australia. The exchange was encouraged by the taxpayer's employer, who organised the necessary licences. Although not necessarily leading to an increase in income, the experience was beneficial to the taxpayer's career as a whole.
The taxpayer incurred work related expenses such as reference books, rail travel, parking fees, postage and stationery, professional expenses and dry cleaning.
The salary and wages derived by the taxpayer whilst in the United Kingdom is exempt income under section 23AG of the Income Tax Assessment Act 1936.
Reasons for Decision
Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent that 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.
The exclusion for expenditure that relates to the earning of exempt income is limited, however, in circumstances where the expenditure is related to, or provides an enduring benefit to work in Australia.
Rail travel, postage, stationary, professional expenses, dry cleaning and parking expenses are considered to be associated with the earning of exempt income and are therefore not allowable deductions under section 8-1 of the ITAA 1997. However, if expenditure is incurred on reference books for use in Australia, a deduction is allowable for that expenditure.
Date of decision: 22 June 2001
Legislative References:
Income Tax Assessment Act 1997
section 8-1
section 23AG Related ATO Interpretative Decisions
ATO ID 2001/328
ATO ID 2001/329
ATO ID 2001/331
Keywords
Exempt income
Work related expenses
Overseas travel expenses
ISSN: 1445-2782
| Date: | Version: | |
| 22 June 2001 | Original statement | |
| You are here | 1 April 2010 | Archived |