Private ruling: Deductions - self-education
Date of advice: 7 October 2025
Published: 24 November 2025
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: XX XXXX 20XX

Ruling: Q1: Can you deduct your apportioned course costs, accommodation and meal expenses you incurred to undertake Master of Business Administration (MBA) courses in Country A under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. | Q2: Can you deduct your apportioned airfares from Australia to Country B under section 8-1 of the ITAA 1997? | A2: No. | Q3: Can you deduct your apportioned airfares from Country B to Country A to start your courses and your airfares from Country A to Australia at the end of the courses under section 8-1 of the ITAA 1997? | A3: Yes.

Relevant facts and circumstances: On XX XXXX 20XX, you commenced employment as a full-time Manager in the Technology Consulting division at Company A. Your role with Company A involves client advisory, digital transformation and leadership in emerging technologies. Your duties and responsibilities include: • Client Advisory & Solution Architecture - Leading the design and delivery of technology-enabled transformation projects for Company A clients - Developing solution architectures across IT Service Management, IT Operations Management, and emerging digital platforms. - Advising clients on the adoption of new technologies, with a focus on governance, risk, and compliance. • Project & Team Management - Managing end-to-end delivery of consulting engagements, including planning, execution, and reporting. - Coordinating multidisciplinary teams and ensuring work is delivered on time, within budget, and aligned to client objectives. - Coaching and mentoring consultants and junior team members. • Stakeholder Engagement - Engaging with senior client stakeholders to gather requirements, present recommendations, and influence decision-making. - Supporting change management and adoption of new technology solutions within client organisations. • Innovation & Emerging Technology - Identifying opportunities to apply emerging technologies such as Artificial Intelligence, data analytics, and cloud platforms in client contexts. - Evaluating risks and ethical considerations associated with technology deployment. • Business Development - Supporting Company A in developing proposals, responding to RFPs, and shaping go-to-market strategies. - Contributing to practice development. In XXXX 20XX, you enrolled in a Master of Business Administration (MBA) with University A as a full fee-paying student. On XX XXXX 20XX, you and your spouse departed Australia for Country B. While in Country B you and your spouse attended a private function. On XX XXXX 20XX, you and your spouse departed Country B for Country A to start your MBA. On XX XXXX 20XX, you and your spouse arrived in Country A. For the duration of your stay in Country A, you and your spouse stayed in an Airbnb. The property was rented under a mobility lease, a type of tenancy in Country A specifically designed for students or professionals on short-term contracts. Your spouse was not employed in Country A and only accompanied you as emotional support. For a period, as part of your MBA you undertook a XX-week international exchange module in Country A. The courses studied were Managing AI Responsibly, Business Simulation, Managing in Organizations, and Decision Making and Influence. Managing AI Responsibly focuses on the governance, ethics, and regulatory considerations of artificial intelligence in business. It examines how leaders can deploy AI responsibly while balancing innovation, compliance, and societal impact. Key topics include algorithmic bias, data privacy, and responsible design of AI systems. You have stated that Managing AI Responsibly is relevant to your employment because you advise clients on digital transformation and responsible adoption of emerging technologies. The course directly enhanced your ability to evaluate AI solutions for compliance, ethics, and risk management, which are essential in client engagements. Business Simulation places students in a simulated business environment where they must manage a company, making strategic decisions across finance, marketing, operations, and leadership. Students compete in teams to run the most successful company by applying integrated decision-making. You have stated Business Simulation is relevant to your employment because as a consulting manager, you are often required to balance competing priorities across different business functions. The course sharpened your ability to synthesize information quickly, make evidence-based decisions, and understand the trade-offs across different areas of a client's business. Managing in Organizations examines organisational behaviour and the challenges managers face in diverse, global environments. Topics include leadership styles, motivation, managing teams, and navigating cultural differences within organizations. You have stated Managing in Organizations is relevant to your employment because your consulting work requires managing teams and engaging stakeholders across diverse industries and geographies. The course improved your ability to lead multicultural teams, adapt your leadership style, and support clients with organizational change management. Decision Making and Influence explores how individuals and leaders make decisions, the role of biases and heuristics, and how influence operates in organizational and market settings. Students learn techniques for improving judgment and for ethically influencing others. You have stated Decision Making and Influence is relevant to your employment because in your client advisory work, you regularly present recommendations, negotiate solutions, and influence outcomes with senior stakeholders. The course equipped you with the framework to recognize and mitigate decision-making biases and to apply influence more effectively and ethically in business settings. For the XX-week period, you incurred the following expenses: • Accommodation. • Meals. • Travel. Four a couple weeks, your spouse travelled to Country C to visit a friend while you continued your study in Country A. On XX XXXX 20XX, you returned to Australia after the courses concluded. You did not receive government funding for the courses. Company A did not reimburse you for any of the expenses related to the courses. You took paid leave form Company A to undertake the courses. Company A provided you with a letter of support stating that you have undertaken your own external, work-related studies to support your professional development in performing your job-related functions as your role as a Manager in Technology Consulting. Your spouse accompanied you for the entire trip and you have apportioned all expenses by 50%.

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

Reasons for decision: Summary: Summary Question 1 You are entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) your apportioned course costs, accommodation and meal expenses you incurred. Question 2 You are not entitled to a deduction under section 8-1 of the ITAA 1997 for your airfares from Australia to Country B, these are private and domestic in nature. Question 3 The airfares incurred travelling from Country B to Country A and from Country A to Australia to undertake the MBA courses will be deductible in the year in which the expenses were incurred. | Detailed Reasoning - Detailed reasoning: 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. The High Court majority in Commissioner of Taxation v Payne [2001] HCA 3 said it is well established that these words are to be understood as meaning incurred 'in the course of' gaining or producing assessable income, and do not convey the meaning of outgoings incurred 'in connection with' or 'for the purpose' of deriving assessable income. The majority further stated that the meaning of 'in the course of' gaining or producing income was amplified in Ronpibon Tin NL v Commissioner of Taxation (Cth) [1949] HCA 15 where it was held that: ... to come within the initial part of [section 8-1] it is both sufficient and necessary that the occasion of the loss or outgoing should be found in whatever is productive of the assessable income, or if none be produced, would be expected to produce assessable income ... Taxation Ruling 2020/1 Income tax: employees: deductions for work expenses under section 8-1 of the Income Tax Assessment Act 1997 sets out when an employee can deduct a work expense under section 8-1 of the ITAA 1997. For the purposes of this Ruling, 'work expense' means 'a loss or outgoing you incur in producing your salary or wages'. For the expense to be deductible it must be incurred in gaining or producing assessable income. Paragraphs 16, 22, 23 and 25 of the TR 2020/1 state: 16. For expenses incurred by employees, the fundamental question is whether an expense is incurred in the course of earning employment income. This involves considering the proper scope of the particular taxpayer's work activities to determine if the circumstances of the expense have a sufficiently close connection to earning the employment income. 22. The requirement that expenses be incurred in the course of producing assessable income means that it is not enough to show only that there is some general link or causal connection between expenditure and the production of income. The expenditure must have a sufficiently close connection to performance of the employment duties and activities through which the employee earns income. 23. Accordingly, in some cases, expenditure would be regarded as too remote from the income-earning activities or incurred only as a prerequisite to earning income, and not incurred in the course of producing that income. 25. Other examples of expenditure that would be too remote from the income-earning activity, or incurred at a point too soon to be characterised as incurred in the course of earning assessable income, would be expenses of looking for and securing new employment. This would also be the case for relocation expenses to work in a different city or state. Similarly, education expenses to obtain qualifications for new employment would not be incurred in the course of gaining or producing relevant assessable income. A deduction cannot be claimed if it is for private or domestic purposes. Paragraph 47 of TR 2020/1 states: 47. Although the separate presence of a private test within section 8-1 implies that expenditure of this nature could otherwise qualify as a deduction under the positive test, it has been observed that it is a 'rare case where an outgoing incurred in gaining assessable income is also an outgoing of a private nature'. Characterisation of an expense as private typically supports a conclusion that the expense does not have a sufficiently close connection to the earning of assessable income by the employee. Taxation Ruling TR 2024/3 Income tax: deductibility of self-education expenses incurred by an individual 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). Paragraphs 13 to 16 and 19 of the TR 2024/3 state: 13. To be deductible under section 8-1, expenditure must be able to be characterised as having been incurred in gaining or producing assessable income. 14. It is well established that the words 'in gaining or producing assessable income' are to be understood to mean 'in the course of' gaining or producing assessable income and do not convey the meaning of outgoings incurred 'in connection with' or 'for the purpose' of deriving assessable income. 15. This means there must be a relationship, or close connection, between the expenditure and what it is that you do to produce your assessable income, or if none is produced, would be expected to produce your assessable income. 16. It is not enough to show only that there is some perceived connection, general link or causal connection between the expenditure and the production of your income. The expenditure must have a close connection to the performance of the duties and activities through which you earn your income. 19. Having the support or encouragement of your employer to undertake the self-education also is not, by itself, determinative of whether the expense is deductible. Under paragraph 22, self-education expenses are incurred in gaining or producing your assessable income if either or both of the following apply: Your income-earning activities are based on the exercise of a skill or some specific knowledge and the self-education enables you to maintain or improve that skill or knowledge. (Principle 1) The self-education objectively leads to, or is likely to lead to, an increase in your income from your current income-earning activities in the future. (Principle 2) Paragraph 23 lists exclusions where self-education expenses are not incurred in gaining or producing your assessable income if either of the following apply: The self-education will enable you to get employment, to obtain new employment or to open up a new income-earning activity (whether in business or in your current employment). This includes studies relating to a particular profession, occupation or field of employment in which you are not yet engaged. These expenses are incurred at a point too soon to be regarded as incurred in gaining or producing your assessable income. (Exclusion 1) You are not undertaking income-earning activities to derive assessable income at the time you incurred the expenses. These expenses are not connected to any income-earning activity at the time they are incurred. (Exclusion 2) Paragraph 28 states that courts and tribunals have found when considering expenses related to overseas study tours or trips, that they may be deductible, but only in specific situations where a clear link exists between the travel and the individual's income-generating activities at the time. Notable factors to demonstrate such a connection are • devoting all of your time while overseas to the advancement of your knowledge relevant to your work • the tour or trip is undertaken while you are employed in the relevant role • the tour or trip was not recreational or general in nature, but rather showed a particular special circumstance to differentiate it from mere recreational satisfaction • the tour or trip was requested or supported by your employer. Paragraphs 81 to 85 discuss apportioning expenses if only part of the deductible is incurred in gaining or producing assessable income. 81. The use of the phrase 'to the extent' in section 8-1 means that there are circumstances where expenses may be deductible only in part if incurred in gaining or producing assessable income as well as for some other use, object or purpose. In these circumstances, it is appropriate to apportion expenses incurred between income-earning and other uses. 82. It is the objective relationship between your expense and your income-earning activities which usually determines whether the expense is incurred in gaining or producing assessable income. In most cases the reason for the expense will be apparent and it will not be necessary to enquire further. However, for expenses voluntarily incurred, which self-education expenses often are, your subjective purpose or motive for incurring the expense may be a relevant factor in determining what the expense is for. 83. For self-education expenses, you apportion the expenses as follows: • Where the self-education expense has distinct and severable parts, and some are for an income-producing purpose and others are for some other purpose, you apportion the expense according to its particular purpose. • Where the self-education expense is a single outlay that serves both an income-earning purpose and some other purpose, you apportion the expense on a fair and reasonable basis. What is fair and reasonable depends on your particular facts and circumstances. 84. Without limiting the application of paragraph 83 of this Ruling, where a course, when considered in its entirety, is not deductible under section 8-1 but particular subjects, classes or modules within the course are sufficiently connected to your income-earning activities, you apportion the expenses by claiming a deduction only for the expenses relating to those particular subjects, classes or modules that are deductible. 85. If there is an incidental purpose, you apportion the expenses as follows: • If the purpose of self-education is the gaining or producing of assessable income, the existence of an incidental private purpose does not affect the characterisation of the self-education expense as wholly incurred in gaining assessable income. • If you are on a holiday or attending an event for private purposes and the self-education was merely incidental to the private purpose, only those expenses directly attributable to the self-education (provided they are incurred in gaining or producing your assessable income) are allowable. Paragraph 125 discusses the deductibility of airfares: 125. Airfares incurred to participate in self-education, provided you are not living at the location of the self-education activity, are deductible. Airfares are part of the cost of undertaking the self-education activities. Paragraphs 90 to 91, provide an example of split purpose airfares. Example 20 - course and holiday, income producing and other purpose 90. Francesco, a paediatrician, has 2 equal purposes when he decides to attend a 5-day international conference on paediatrics in Singapore, to be followed by a 7-day holiday in Thailand. The conference package is $3,500 ($1,500 return airfare, $500 for the cost of the conference and $1,500 for accommodation and meals at the conference venue). Francesco paid another $3,000 for accommodation, meals and car hire for the 7-day holiday in Thailand. 91. Francesco is allowed a deduction of $2,000 for the conference cost and the accommodation and meals expenses at the conference. Only half of the return airfare ($750) is allowed, as the expense was incurred for 2 equal purposes, one income-earning and the other private. The other expenditure of $3,000 relating to the holiday in Thailand is private in nature and not deductible. Paragraphs 128, 130, 131 and 132 discusses the deductibility of accommodation and meals: 128. If you are away from home overnight for self-education connected with your income-earning activities, the accommodation and meal expenses you incur are deductible. They are part of the cost of participating in the self-education. The self-education expenditure is not of a private nature because its occasion is your travel away from home on income-earning activities. 130. Similarly, accommodation and meal expenses you incur in connection with self-education will be private and domestic living expenses where you are living at the location of the self-education activity. This will apply regardless of whether the self-education allows you to acquire and improve the skills and knowledge you require to carry out your income-earning activities or leads to, or is likely to lead to, an increase in income from your income-earning activities. 131. The following factors indicate when your accommodation and meal expenses are private and domestic living expenses, and are not deductible: • The length of the overall period you will be away from your usual residence is a relatively long one. • The nature of the accommodation is such that it becomes your usual residence. • You are, or can be, accompanied by family or friends or visited by family or friends. 132. No single factor is decisive and the weight given to each of these factors will vary depending on your individual circumstances. | Detailed Reasoning - Application to your circumstances: To determine whether circumstances exist that support your self-education deductions, it is necessary to determine whether there is a sufficient connection between you incurring your expenses and your income earning activities at the time of commencing the courses. Whether such a connection exists is a question of fact and is to be determined by reference to all the facts in your case. Question 1 Course Fees You were employed as a Manager in the Technology Consulting division at Company A over the duration of your overseas MBA courses. The position description of your role confirms that the courses have a clear connection to your income producing activities. Furthermore, you remained employed by Company A for the entire time you incurred MBA course fees. As such, the course fees incurred to undertake the MBA courses will be deductible in the year in which the expenses were incurred. Accommodation and meals The XX-week period you were undertaking the courses is considered ashort period of time. The nature of your Airbnb accommodation is such that it did not become your usual residence. One negative factor that leads to a private and domestic view, is that your spouse accompanied you. However, the overall period you were away, along with the short-term nature of the accommodation arrangements indicate you were travelling away from your home. You can claim a deduction for your apportioned accommodation and meals expenses. Question 2 The Commissioner is not satisfied that your travel from Australia to Country B has the relevant connection to your income earning activities for it to be deductible under section 8-1 of the ITAA 1997. Similar to example 20 of TR 2024/3, you travelled to Country B for a family function, which is private and domestic in nature. Therefore, expenses you incurred flying from Australia to Country B will not be deductible under section 8-1 of the ITAA 1997. Question 3 Airfares are deductible when the expense is incurred to participate in a course of self-education which is related to your income producing activities. However, if you move to a new place to live while undertaking a course of self-education, the nature of the airfares becomes private and personal as the nexus between the airfare and your earning of assessable income is severed. In your case, you resided in short-term accommodation with your spouse while completing your MBA in Country A. The accommodation is temporary in nature for the duration of six-weeks. As such, the airfares incurred travelling from Country B to Country A and from Country A to Australia to undertake the MBA courses will be deductible in the year in which the expenses were incurred.