Private ruling: Self-education expenses
Date of advice: 6 December 2023
Published: 22 January 2024
Ruling period: Year Ending 30 June 20XX
Date scheme commenced: DD MM 20YY

Ruling: Q1: Are you entitled to a deduction for self-education expenses incurred under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. | Q2: Are you entitled to a deduction for airfares, accommodation, and meal expenses incurred in association with completing your self-education under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A2: Yes.

Relevant facts and circumstances: You are employed full time as a solicitor. In addition to interpreting legislation and caselaw, you role has duties that require a combination of legal knowledge, and negotiation and communication skills. To develop your negotiation and oral communication skills, you voluntarily commenced an education course with a training provider. The course advises the course will be ideal for solicitors, as one of the areas of focus is around negotiation and communication skills. Additionally, the education provider also offers one-on-one sessions with an instructor to ensure the course content is closely tailored to an individual's employment-related goals. The timeframe of the course is initially XX months, and costs $XX. There is also the option to continue the coursework for $XX per month until proficiency in those skills have been achieved. Currently, you have incurred the initial cost of the course, and an additional session. You intend to continue the course at a cost of $XX to $XX per month. You expect that by 30 June 20XX, the total course fees you will have paid in the 20XX financial year will be somewhere between $XX and $XX. As you live in a different state to that of the education provider, you have incurred travel expenses. You are intending to fly interstate at least once every few months for a session. This is required as aspects of the course work on body language and posture, which must be addressed in person. You expect this to cost between $XX and $XX by the end of the financial year (these costs covering flights, accommodation, and meals). Your employer is not contributing to the cost of the course, nor are you receiving any government assistance.

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

Reasons for decision: Summary: Section 8-1 of the 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 2023/D1 Income tax: deductibility of self-education expenses incurred by an employee or a person in business, discusses circumstances in which self-education expenses are allowable. 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 solicitor. Consequently, the self-education expenses you incurred while you were employed by your employer have the necessary and relevant connection.