Private ruling: Work related expenses - Self-education
Date of advice: 28 June 2018
Published: September 2018
Ruling period: Ending 30 June 20xx | Period ending 30 June 20xx
Date scheme commenced: 1 July 20xx

Ruling: Q1: Are you entitled to a deduction for expenses incurred in completing a Master of Law Degree at the University of XYZ in the Country A for the academic periods including ( tuition fees, text books, stationery, airfares, university based accommodation, gas heating, and meals)? | A1: Yes | Q2: Are you entitled to a deduction for insurance and a study visa for the Country A? | A2: No

Relevant facts and circumstances: You are currently employed as a lawyer. Your current roles are: Advising on matters of corporate, administrative, privacy, employment, insolvency, criminal and intellectual property law. Advising on legal risks associated with policy proposals and departmental programs. Supporting fraud investigations area with strategic and operational legal advice. Appearing as advocate in tribunal proceedings. Drafting legislative instruments, policy documents, litigation material and correspondence. Delivering legal seminars to staff. Building and maintaining client relationships in a geographically dispersed environment. Supervising junior lawyers, managing their workloads and meeting their development needs. You are completing a Master of Law degree at a University of XYZ in the Country A over three academic periods. You intend to complete subject papers to enhance your current position requirements: The University requires students to live on campus at a university-owned college during the academic periods, accommodation costs are billed based on the academic periods with a separate gas heating charge. You have been provided unpaid study leave and will be returning to Australia to work during the breaks in the academic periods. You have course fees, accommodation fees and airfares costs. You are not travelling accompanied; the only purpose for this travel is to complete your course of study at a University.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1

Reasons for decision: Summary: You are entitled to claim a deduction for Work Related Expenses – Self-Education for tuition fees, flight costs, text books, stationery expenses and accommodation expenses as these expenses have a nexus to your assessable income. You are not entitled to claim for, insurance and Visa application as these expenses are seen as private and domestic in nature. | Detailed Reasoning - Detailed reasoning: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 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. Taxation Ruling TR 98/9 discusses the circumstances under which self-education expenses are allowable as a deduction. A deduction is allowable for self-education expenses if a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of the self-education enables the taxpayer to maintain or improve that skill or knowledge ( Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348. 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 When considering items that would be allowable as a self-education deduction consideration to the item being compulsory and unavoidable expenses, as well as those for which a need can be shown, are regarded as 'necessarily incurred'. This includes expenditure on fares, travel and accommodation, as well as fees, books and equipment to the extent they are incurred in pursuing a prescribed course of education. The balance is between expenses needed to fulfil the requirements of the course and those related to the provision of items, etc., which may merely serve a useful purpose. In your case, it is accepted that the course will maintain or enhance the skills that you require to perform your duties as a Lawyer. Consequently, the self-education expenses you will incur have the necessary and relevant connection with the earning of your assessable income and are allowable deductions under section 8-1 of the ITAA 1997. | Detailed Reasoning - Course Fees, Textbooks, Stationery, and Accommodation: TR 98/9 provides that course fees, textbooks, stationery and accommodation costs incurred in attending an educational institution where there is a necessary and relevant connection with the earning of assessable income is allowable under section 8-1 of the ITAA 1997. Therefore, the expenses you will incur for course fees, textbooks, stationery and accommodation costs relating to the study you will undertake overseas are deductible self-education expenses. | Detailed Reasoning - Airfares: Taxation Ruling TR 98/9 provides that airfares incurred on overseas study tours or sabbatical, on work related conferences or seminars or attending an educational institution are deductible under section 8-1 of the ITAA 1997. They are considered part of the necessary costs of participating in the tour or attending the conference or seminar or the educational institution. | Detailed Reasoning - Insurance: Insurance costs are generally considered to be a private expense. You are therefore not entitled to a deduction, under section 8-1 of the ITAA 1997, for your insurance expenditure as this is private in nature. | Detailed Reasoning - Visa: The purpose of obtaining a visa is to allow you to enter and stay in another country. The expense is not considered to be incurred in the course of gaining or producing your assessable income. Therefore, the expense is private in nature and is not an allowable deduction under section 8-1 of the ITAA 1997.