Private ruling: WRE - Self Education Expenses - Management Programme
Date of advice: 13 October 2016
Published: December 2016
Ruling period: Period ended 30 June 20YY
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a deduction for self-education expenses in relation to a Management Programme completed overseas including: • application fees • programme fees • return travel • travel to airport • accommodation and meal expenses • text books • Wifi, and • stationery? | A1: Yes | Q2: Are you entitled to a deduction for: • insurance • seating preference • laundry expenses, and • Visa for an overseas country? | A2: No

Relevant facts and circumstances: You were employed as a director. You approached your employer, for approval, to take a leave of absence to undertake study. You were not accompanied by family. You arrived at your destination prior to commencement of your study you were accommodated in a Hotel. You attended a University to complete your studies. You were not required to attend the training in a uniform. You had a period of personal travel. You maintained your home; this was not rented for the period of absence. You were advised formally of your redundancy post travel. You maintained a travel diary and have receipts to substantiate your claims.

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

Reasons for decision: Summary: Your are entitled to claim a deduction for Work Related Expenses - Self-Education for all programme fees, return 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 seating preference, insurance, Visa application and laundry expenses 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. Consequently, the self-education expenses you incurred does 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, Accommodation and Application Fees: TR 98/9 provides that course fees, application 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 incurred for course fees, application fees, textbooks, stationery expenses and accommodation costs relating to the study you undertook 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. The purpose of seating preference is to provide you with a preferred position and allocation of seating during your flights. 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. | 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. | Detailed Reasoning - Laundry: A deduction is allowable for the cost of washing, drying or ironing clothes that fall into one or more of the following categories: • Compulsory uniform; • Non-compulsory uniform; • Occupation specific clothing; or • Protective clothing The purchase and wearing of clothing as well as its cleaning and maintenance is therefore a necessary and personal expense which would normally be classified as being an expense of a private and domestic nature In your circumstance you did not attend your training in a uniform, the claim for laundry expenses are therefore seen as domestic and private in nature. | Detailed Reasoning - Limit on deductibility section 82A: The self-education expenses you can deduct may be subject to a reduction of up to $250 in accordance with section 82A of the Income Tax Assessment Act 1936. An explanation on how this provision operates is provided at paragraphs 119 to 155 of T 98/9, which can be accessed on our internet website at www.ato.gov.au.