Private ruling: Self-education expenses
Published: April 2012
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for one half of the costs for travel between your home and the airport and international flights? | A1: Yes | Q2: Are you entitled to a deduction for the costs incurred in attending the conference, including travel to and from the conference, attendance fees, stationery and materials required for the conference? | A2: Yes | Q3: Are you entitled to a deduction for meals between the conference attendance times? | A3: Yes | Q4: Are you entitled to a deduction for accommodation expenses incurred while attending the conference? | A4: Yes

Relevant facts and circumstances: You are employed full time. You will be attending work related conference in Country X. The conference will be held over three days during the 2012-13 income year. You will travel from Australia to Country X for the conference and stay for approximately two weeks. Your employer recognises the conference as beneficial to your employment; however, you will not be reimbursed for any of the expenses you incur. You will take annual leave from your employment for part of the time and the remainder will be rostered days off. You will be travelling alone. You estimate that 35-40% of the time spent in Country X will be dedicated to education and work related activities; being the three days of the conference and approximately an additional two days travelling to the conference and writing up notes. The remainder of the time spent in Country X will be of a private nature. You will keep a travel diary and receipts in relation to relevant costs.

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 said there must be some fair and reasonable division on the facts of each case. TR 98/9 provides an example at paragraph 70: Francesco, a paediatrician, has 2 equal purposes when he decides to attend a five-day international conference on paediatrics in Singapore to be followed by a seven-day holiday in Thailand. The conference package is $2,500 ($1,000 return air fare, $500 for the cost of the conference and $1,000 for accommodation and meals at the conference venue). Francesco paid another $2,000 for accommodation, meals and car hire for the 7 day holiday in Thailand. Francesco is allowed a deduction of $1,500 for the conference cost and the accommodation and meals expenses at the conference. Only half of the return air fare ($500) is allowed as the expense was incurred for two equal purposes, one income-earning and the other private. The other expenditure of $2,000 relating to the holiday in Thailand is private in nature and not allowable as a deduction. In your case it is accepted that the conference will enable you to maintain or improve your skills or knowledge in your employment. However, it is considered that your travel to Country X has a dual purpose; one being the conference and the other being a private purpose. Accordingly, some of your expenses will be required to be apportioned appropriately. International air fares and travel to and from airport Your case is similar to the example provided in TR 98/9. The costs you will incur for international air fares and travel between your home and the airport are incurred both for the income producing purpose of the conference and a private purpose. Accordingly you are entitled to a deduction for one half of these expenses. Conference costs You will incur a number of costs that will be directly associated to the work related conference. These include attendance fees, travel to and from the conference, stationery and materials. These costs can be seen to be directly associated with the conference and you are therefore entitled to a deduction for these costs under section 8-1 of the ITAA 1997. Accommodation and meals You will also incur costs for accommodation and meals over the days of the conference. 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). Where a taxpayer is away from home overnight in connection with a self-education activity, accommodation and meals expenses incurred are deductible under section 8-1 of the ITAA 1997. Examples include an overseas study tour or sabbatical, a work-related conference or seminar or attending an educational institution. They are part of the necessary cost of participating in the tour or attending the conference, the seminar or the educational institution. We do not consider such expenditure to be of a private nature because its occasion is the taxpayer's travel away from home on income-producing activities (TR 98/9). Accordingly, you are entitled to a deduction for the meals and accommodation expenses you incur during the conference.

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