Edited version of private ruling

Authorisation Number: 1011536128350

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Ruling

Subject: Travel

Question

Are you entitled to a deduction for a proportion of your airfare?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

You are working for a company who has international clients.

You are undertaking a certificate and another related certificate.

Your employer is paying the cost of the courses, accommodation and examination while you are overseas.

You incurred the costs of the airfares.

Between the study and exam, your spouse will join you for a holiday.

The course and exam are X days total and you will be away for a total of Y.

The trip was paid for in the 2009-10 income year and will be taken in the 2010-11 income year.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

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.

Self education expenses fall for consideration under section 8-1 of the ITAA 1997.

Taxation Ruling TR 98/9 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 the taxpayer to maintain or improve that skill or knowledge (Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348).

Taxation Ruling TR 98/9 states that airfares incurred on overseas study are deductible as they are part of the necessary cost of participating in the course.

In your case, it is accepted that the course will maintain or enhance the skills that are required in the performance of your current employment duties. Consequently the self education expenses incurred have the necessary and relevant connection with the earning of your assessable income and are therefore deductible under section 8-1 of the ITAA 1997.

Where there is a dual purpose for the travel, costs incurred must be apportioned in a fair and reasonable manner. The essential character is to be determined by an objective analysis of all the surrounding circumstances (see Fletcher & Ors (199) 173 CLR 1 at 17; 91 ATC 4950 at 4957 and 4958; (1991) 22 ATR 613 at 622).

In your case, your course was for X days and you stayed on for an additional number of days. Therefore, it would be considered fair and reasonable to apportion the expense in proportion to the days spent in each pursuit.

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