Private ruling: Self-education expenses - overseas travel
Date of advice: 5 November 2015
Published: November 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to a deduction for the cost of overseas travel as a self-education expense? | A1: No.

Relevant facts and circumstances: You are a principal at a school. You left Australia to travel overseas. This trip was organised through an agency which is supported by your school. Your reason for travelling overseas was to learn about the work that the agency completed, how money is spent and share the information with the school community. Your employer did not request that you travel overseas. You took school holidays and leave to travel overseas. You did not receive any payments from the school for expenses for the period you were on holiday.

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 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. Travel expenses may be deductible where they form part of the taxpayer's self-education expenses. 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. However, if the subject of the self-education is too general in terms of the taxpayer's income earning activities, the necessary connection between the self-education expense and the income earning activity does not exist. You travelled overseas to obtain information which you consider is relevant to the school community. Although the trip may have broadened your knowledge and benefited you as a teacher, the courts have held that this reason alone is not enough to demonstrate a sufficient connection between the travel and the income producing activities. In Case U109 87 ATC 657, the taxpayer was a science teacher who specialised in geology and was the head of the school science department. He undertook a 17 day trip to Indonesia organised by a natural museum history society of which he was a member. During the course of the trip he visited several volcanoes and other geological sites, and attended a geological congress. He also visited some tourist attractions. The taxpayer took many slides of the geological sites and prepared a taped commentary which he used in his teaching on his return. The Administrative Appeals Tribunal (AAT) examined previous court decisions dealing with teachers who had claimed for the cost of overseas travel. It concluded that the general principle in these cases was that the fact that the taxpayer may have been a better teacher after the travel was not enough to demonstrate a sufficient connection between the travel and their income earning activities. The AAT stated that some taxpayers are fortunate in finding personal and recreational satisfaction in their field of endeavour and that in this case the trip was recreational in character and not deductible. The circumstances of your case can be compared to the above decision, in that, your overseas trip may have assisted you to provide information to your students and school community, but the knowledge that you gained is too general in nature for the expenses to be incurred in the course of gaining your assessable income as a school principal Therefore your trip is not considered to have a sufficient connection to the duties of your employment. Accordingly, the expenses you incurred in respect of your overseas trip are not allowable as a self-education expense.