Private ruling: Self-education expenses
Date of advice: 2 September 2015
Published: September 2015
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 1 July 2013

Ruling: Questions and answers | 1. Are you entitled to a deduction for airfares and accommodation to attend training overseas? | Yes. | 2. Are you entitled to a deduction for the costs associated with obtaining a visa to undertake training in overseas? | No.

Relevant facts and circumstances: You are a professional in Australia. You went overseas to undertake training in your profession. This training was to enhance your current skills as an professional. You wish to claim for airfares to and from the overseas country along with accommodation while you were in the overseas country undertaking the training. You wish to claim a deduction for costs associated with obtaining the relevant visas to enter the overseas country to undertake the training.

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, or relate to the earning of exempt income. Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business discusses circumstances in which self-education expenses are allowable as a deduction under section 8-1 of the ITAA 1997. If a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and the self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction. In addition, 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, the self-education expenses are allowable as a deduction. However, the decision of the High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541 establishes the principle that no deduction is allowable for self-education expenses if the study is to enable the taxpayer to get employment, obtain new employment or to open up a new income-earning activity (whether in business or the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. If a course of study is too general in terms of the taxpayer's current income-earning activities, the necessary connection between the self-education expenses and the income-earning activity does not exist. In your case you went overseas to undertake training in your profession. This training has enhanced your current skills as a professional. The Commissioner is satisfied that there is a sufficient connection between the skills and knowledge required in your current position and the training. Accordingly, you are entitled to a deduction for the costs associated with your training. The airfares and accommodation are an allowable deduction. | Detailed Reasoning - Visa expenses: The expenses associated with acquiring visas relate primarily to the taxpayer's personal right to travel to any overseas destination. They closely parallel the costs associated with obtaining a driver's licence, which were characterised as being of a private nature ( Case P55 82 ATC 253; 25 CTBR (NS) 824 Case 117 ). Thus expenditure in obtaining a passport and visa is generally private in nature. Similarly expenses such as travel insurance policies invariably cover items that are generally private in nature. For example, illness, loss of baggage and theft or damage to belongings. As the expenses incurred on visas are considered private in nature, they are not allowable deductions.