Private ruling: Self-education expenses
Date of advice: 14 May 2018
Published: July 2018
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a self-education deduction for the costs associated with undertaking a course of study? | A1: Yes | Q2: Are you entitled to a deduction for airfares, accommodation and meals in country Y where you will undertake the course? | A2: Yes | Q3: Are you entitled to a deduction for textbooks which relate to the study of the MBA? | A3: Yes

Relevant facts and circumstances: You are a resident of Australia for taxation purposes. You are currently employed by a communications firm. Your duties are as follows: Sales Support Contribute to the design, development, recommendations for sales opportunities that; ● Assists sales employees to achieve their sales targets and objectives. ● Provides customers with an appropriate understanding of the value proposition of our ● proposal through written and verbal presentations and meetings. ● Ensure quality and excellence standards of the firm are achieved. ● Identifies further business opportunities for the firm. ● Ensures that proposals meet the firms guidelines for acceptable margin ● Own the activities and deliverables for assigned opportunities. ● Provide technical review, qualification and support for leads and opportunities. Regional Preferred Partnership Management Contribute to the exploration, identification, engagement and management of preferred partners to ensure that we: ● Fully realise all sales opportunities. ● Minimise the firms resource capability costs. ● Deliver optimum quality solutions. Contract and Risk Management Contribute to and Implement processes and practices for contract and risk management to ensure: ● Risk for the firm opportunities is managed, reduced, minimised or eliminated; ● Contract completion performance is clear and deliverable; You will undertake a course in country Y. The subjects you will study as part of the course are: ● Managing & Leading in a Global Environment ● Strategy & Competition: The Practice of the Contemporary Firm ● Marketing & Operations: Operationalising and Communicating Value ● Accounting & Finance: Measuring Business Value ● Business Simulation Project ● Live Business Project ● Electives x 3 You will incur the following expenses: ● Course fees ● Travel to and from country Y 6 times throughout the MBA for a total of 30 days in Country Y ● Accommodation in Country Y for 30 days ● Meals in Country Y for 30 days ● Textbooks The course will increase your knowledge and skills in your current employment. You will continue doing the same job. You are a full fee paying student. Your employer will not contribute to any expenses associated with the curse.

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 will undertake a course in Country Y. This course will enhance your skills and knowledge in your current employment. The Commissioner is satisfied that there is a sufficient connection between the skills and knowledge required in your current position as and the Course. Accordingly, you are entitled to a deduction for the costs associated with your course in Country Y. The airfares to and from Country Y to undertake the MBA are an allowable deduction along with 30 days of food and accommodation expenses. Textbooks are also an allowable deduction. Accordingly the costs associated with the course in Country Y are an allowable deduction under section 8-1 of the ITAA 1997.