Private ruling: Self-education expenses
Date of advice: 27 October 2016
Published: February 2017
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you entitled to a deduction for self-education expenses incurred in relation to a course? | A1: Yes. | Q2: Are you entitled to a deduction for a portion of the airfare expense incurred for your overseas travel to attend the course? | A2: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1936 Section 82A

Reasons for decision: Summary: 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. Taxation Ruling TR 98/9 (TR 98/9) provides the Commissioner's view for the circumstances under which self-education expenses are allowable as a deduction. 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. Accommodation and meals Where a taxpayer is away from home overnight in connection with a self-education activity, accommodation and meals expenses incurred are deductible under section 8-1. They are part of the necessary cost of participating in the tour or attending the conference, the seminar or the educational institution. Application to your circumstances In your case, there is sufficient connection between the courses you completed and your income producing activities at the time. You undertook the program to enhance your existing capabilities, skills and knowledge that are required in the performance of your current employment. Consequently, the self-education expenses incurred in undertaking this program have the necessary and relevant connection with the earning of your assessable income and are deductable under section 8-1 of the ITAA 1997. Airfares TR 98/9 states that airfares incurred on overseas study tours or sabbatical are an allowable deduction under section 8-1 of the ITAA 1997. TR 98/9 discusses the apportionment of overseas travel expenses where there is a dual purpose for the travel. As highlighted in TR 98/9, if the travel was undertaken equally for income earning purposes and for private purposes the expenses would be apportioned equally. In your case, you travelled overseas for work related study. However, the course you completed was for X days and the entire trip was for X days, including travelling time. The additional time spent away was for private purposes only. We consider there was a dual purpose for the travel; therefore you are required to apportion the deduction in relation to the airfares.

Relevant facts: You are an Australian resident for tax purposes. | You travelled overseas to complete specialised courses related to your work at the time. | The course was undertaken in order to gain a formal qualification for use in carrying on your profession. | At the time of participating in the course you were employed in a field which related directly to the courses you undertook.