Private ruling: Self-education expenses
Date of advice: 2 November 2016
Published: February 2017
Ruling period: 30 June 201X to year ending 30 June 201X
Date scheme commenced: 1 July 201X

Ruling: Q1: Can you claim a deduction for accommodation and travel expenses paid in connection with a self-education course at an interstate training provider? | A1: Yes. | Q2: Can you claim a deduction for setup expenses paid in connection with a self-education course at an interstate training provider? | A2: No.

Relevant facts and circumstances: You enrolled in a relevant course ('the course'), which ran for less than 12 months. The course was not available in your home location. The course results in a relevant approved licence. Similar courses closer to your home location result in only state-level licencing. You paid for the course by a loan. You are employed as a skilled officer in various States, and your employer provided you with unpaid leave for the duration of the course. You did not work for any other employers in the course location. Your family remained in your home location while you attended the course in another State. You continued to maintain your family and the family home while on unpaid leave by drawing on savings. You returned to the family home approximately every 3 weeks. You incurred temporary accommodation expenses across the 201X and 201X financial years to attend the course. You incurred costs in travel to the course, and home again at the course's conclusion. You incurred setting up costs for the temporary accommodation

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

Reasons for decision: Summary: You asked for a private ruling regarding claiming expenses you incurred in attending the relevant course. As the course relates to your current income earning activities, any expenses related to completing and attending the course may be deductible. 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 98/9 Income Tax: deductibility of self-education expenses incurred by an employee or a person in business ('TR 98/9') provides that 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. You undertook the course which likely leads to an increase in your current employment income as a skilled officer. Paragraph 26 of TR 98/9 states that expenses relating to self-education which are compulsory and unavoidable, as well as those for which a need can be shown in terms of fulfilling the requirements of the course, are regarded as being 'necessarily incurred' and are expenses of self-education. Accommodation Costs A deduction is not allowed if it can be determined that you established a new home in the new location. The accommodation needs to be shown as a temporary measure with the sole purpose of attending the course. The course you are attending is away from your family home. You are renting accommodation in another State in order to attend the course and complete its requirements. Paragraph 93 of TR 98/9 shows some key factors to consider when determining when a new home has been established, including: ● The total duration of the travel; ● Whether you are accompanied by your family; ● Whether you are maintaining a family home at the previous location while you are away; and ● The frequency and duration of return trips to the previous location. Your family remained in your home location while you attended the course. You continued to maintain the family home in your home location, and you returned to the family home approximately every 3 weeks. Taking these factors into consideration, you did not establish a new home in another State. It was compulsory and unavoidable for you to incur accommodation expenses in order to attend the course in a location interstate from your family home. You are entitled to a deduction for the cost of accommodation incurred in attending the course. These costs will need to be apportioned to the financial year in which they were incurred. Travel Costs The costs of less than $700 in travel to attend the course, and the return home at the conclusion of the course are considered a necessary expense in attending the course. You are entitled to a deduction for the cost of travel incurred in attending the course. These costs will need to be apportioned to the financial year in which they were incurred. Setting up Costs As mentioned above, a deduction is not allowed where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. The costs you incurred in setting up the temporary accommodation are of a private and domestic nature. Therefore, the setting up costs are not deductible.