Edited version of your written advice

Authorisation Number: 1012834319767

Date of advice: 8 July 2015

Ruling

Subject: Self-education expenses

Question

Are you entitled to claim a deduction for work-related self-education expenses relating to overseas study?

Answer

Yes

This ruling applies for the following periods:

Year ended 30 June 2014

Year ended 30 June 2015

Year ended 30 June 2016

The scheme commences on:

1 July 2013

Relevant facts and circumstances

You are an employee.

In the 2013-14 financial year you completed a course relevant to your employment duties.

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 to the extent to which they are of a capital, private or domestic nature. 

Taxation Ruling TR 98/9 discusses the deductibility of self-education expenses. Paragraph 13 of TR 98/9 states: 

If a taxpayer's income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction. 

Thus, self-education expenses incurred by a taxpayer will qualify for deduction under section 8-1 of the ITAA 1997, if there is a sufficient nexus to the production of assessable income and the improvement of a skill or some specific knowledge.  

Paragraph 23 of TR 98/9 states that subject to the general tests under section 8-1 of the ITAA 1997 being met, the following types of expenses relating to approved self-education are allowable deductions;

• course or tuition fees of attending educational institutions, conferences or seminars

• the cost of professional and trade journals, text books and stationery

• airfares incurred on overseas study tours, on work-related conferences or seminars, or attending educational institutions

• where a taxpayer is away from home overnight or temporarily, accommodation and meal expenses incurred on overseas study tours, conferences or seminars, or attending an educational institution  

You have demonstrated that the course of education has a nexus to your current employment. 

It must now be determined whether the expenses incurred are of a capital, private or domestic nature.  

Airfares 

You have incurred airfare expenses in travelling. As these expenses were incurred in undertaking the self-education, you are therefore entitled to a deduction for these costs under section 8-1 of the ITAA 1997.

Accommodation

You incurred expenses relating to accommodation. Expenditure on accommodation ordinarily has the character of a private or domestic expense. However, the occasion of the outgoing may operate to give the expenditure the essential character of an income-producing expense.  Paragraph 89 of TR 98/9 outlines:

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. (Examples include an overseas study tour or sabbatical, a work-related conference or seminar or attending an educational institution.) They are part of the necessary cost of participating in the tour or attending the conference, the seminar or the educational institution. We do not consider such expenditure to be of a private nature because its occasion is the taxpayer's travel away from home on income-producing activities.

However, where it is considered that a taxpayer has established a new place of residence, the accommodation expenses will retain its private nature and will not be deductible.

TR 98/9 states:

The key factors to be taken into account in determining whether a new home has been established include:

• the total duration of the travel;

• whether the taxpayer stays in one place or moves frequently from place to place;

• the nature of the accommodation, e.g., hotel, motel, long term accommodation;

• whether the taxpayer is accompanied by his or her family;

• whether the taxpayer is maintaining a home at the previous location while away. The fact that the taxpayer did not maintain a home while away for an extended period was the decisive factor in characterising expenditure on accommodation and meals as private 'living expenses' in a series of Board of Review decisions: Case N13 13 TBRD (NS) 45; 10 CTBR (NS) Case 98; Case N16 13 TBRD (NS) 65; 10 CTBR (NS) Case 99; Case N19 13 TBRD (NS) 76; Case N20 13 TBRD (NS) 79; and

• the frequency and duration of return trips to the previous location.

In your case you travelled for less than 6 months. You sub-let accommodation in one location for that time. Your family did not accompany you, and you maintained your residence.

The relevant factors are the period of time you were away, the continuing maintenance of your home and the fact that your family did not accompany you. These factors indicate that a new home was not established.

Therefore accommodation expenses incurred in the course of your trip are allowable deductions.

Tuition fees, text books, supplies and equipment

You incurred expenses for tuition fees, text books, supplies and equipment. Therefore, as outlined in TR 98/9 you are allowed a deduction for these expenses under section 8-1 of the ITAA 1997.

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