Private ruling: Self-education
Published: November 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for 50% of the cost of airfares and the cruise? | A1: Yes.


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 or are necessarily incurred in carrying on a business for the purpose of 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 the circumstances under which self-education expenses are allowable as a deduction. 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 you to maintain or improve that skill or knowledge ( Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348). In your case, we accept that the seminars you attended have the relevant nexus to producing your assessable income. Therefore, your intention or purpose in incurring the expense may be an element in determining whether the expense is allowable. TR 98/9 discusses the apportionment of overseas travel expenses where there is a dual purpose for the travel. Paragraphs 65 and 66 provide the following guidance: there are at least two kinds of expenditure that require apportionment under section 8-1 of the ITAA 1997. The first is expenditure in respect of a matter where distinct and severable parts are devoted to gaining income and other parts are devoted to some other end. If a study tour or work-related conference or seminar was mainly devoted to a private purpose, such as having a holiday, and the gaining or producing of income was merely incidental to the private purpose, only those expenses directly attributable to the income-earning purpose would be allowable. The second kind of apportionable expenditure is a single outlay that serves both an income-earning purpose and some other purpose indifferently. While the High Court recognised that there can be no precise arithmetical division in such cases, it said there must be some fair and reasonable division on the facts of each case. For example, if a study tour or work-related conference or seminar is undertaken equally for income-earning purposes and private purposes, it would be appropriate to apportion the expenses equally between the purposes. In your case, there are two equal purposes of the trip. That is, to undertake the conference and to have a holiday. Therefore, as there is a deductible and a private purpose, you are entitled to a deduction for 50% of the costs of airfares and the cruise.

You undertook a work related conference. | The conference was held as part of a cruise. | You were away a total of 13 days. | The cruise was for seven days. | Sessions were held over 2 full days and the rest were part days with sight-seeing tours over the periods not in sessions.