Private ruling: Self education
Published: July 2014
Ruling period: Year ending 30 June 2014 | Year ending 30 June 2015
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for the total cost of your flights? | A1: No. | Q2: Are you entitled to a deduction for your share of the cost of accommodation, transport and food while attending the trade fair? | A2: Yes.

Relevant facts and circumstances: You are employed in a profession. You will be attending a trade fair overseas. The trade fair will be held for X days. You will then travel on to another country for a holiday and return home several weeks later.

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

Reasons for decision: Summary: 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. Taxation Ruling TR 98/9 states self-education expenses are allowable as a deduction 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. Travel expenses may be deductible where they form part of a taxpayer's self-education expenses. TR 98/9 discusses the apportionment of overseas travel expenses where there is a dual purpose for the travel. Paragraph 65 states that 'Both Ronpibon Tin NL (78 CLR at 59) and Fletcher & Ors v. Federal Commissioner of Taxation (1991) 173 CLR 1 at 16; 91 ATC 4950 at 4957; 22 ATR 613 at 621 recognise there are at least two kinds of expenditure that require apportionment under section 8-1 of the ITAA 1997. The first is expenditure in respect of a matter where distinct and severable parts are devoted to gaining income and other parts are devoted to some other end. If a study tour or work-related conference or seminar was mainly devoted to a private purpose, such as having a holiday, and the gaining or producing of income was merely incidental to the private purpose, only those expenses directly attributable to the income-earning purpose would be allowable. The second kind of apportionable expenditure is a single outlay that serves both an income-earning purpose and some other purpose indifferently. While the High Court recognised that there can be no precise arithmetical division in such cases, it is said there must be some fair and reasonable division on the facts of each case. TR 98/9 provides an example at paragraph 69: Jenny, a doctor, was holidaying in Cairns when she became aware of a work-related seminar on the current treatment of cancer patients. The cost of the half-day seminar was $200. Jenny is able to claim a deduction for the cost of the seminar because it is directly attributable to an income-earning purpose. However, no part of her air fare to Cairns or her holiday accommodation is an allowable deduction. In this case it is accepted that the trade fair will enable you to maintain or improve your skills and knowledge. However, we consider that the primary purpose of your travel is for private purposes. You will spend X days at the conference and then several weeks on holidays. As the travel is mainly devoted to a private purpose only the expenses directly attributable to the income-earning purpose are allowable. Therefore, you are not entitled to a deduction for the cost of your flights. Expenditure on accommodation and meals ordinarily has the character of a private or domestic expense. However, the occasion of the outgoing may operate to give the expenditure the essential character of an income-producing expense. An example is where the expenditure is incurred while away from home overnight on a work-related activity (Case E34 5 TBRD (NS) 205 at 211; 4 CTBR (NS) Case 99 at 587; FC of T v. Cooper 91 ATC 4396 at 4415; (1991) 21 ATR 1616 at 1638; Roads and Traffic Authority of NSW v. FC of T 93 ATC 4508 at 4521; (1993) 26 ATR 76 at 92). In this case you are entitled to a deduction for your share of the cost of your accommodation, transport and food while attending the trade fair.