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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your written advice

Authorisation Number: 1051224068247

Date of advice: 12 May 2017

Ruling

Subject: self-education expenses

Questions and answers

1. Are you entitled to claim a deduction for the cost of tuition, teaching notes, accommodation and flights to country A?

Yes.

2. Are you entitled to claim a deduction for the cost of obtaining a visa, the cost of the visa, and travel insurance?

No.

This ruling applies for the following period(s)

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on

1 July 20XX

Relevant facts and circumstances

You are employed.

Your employment is permanent full-time.

You began your employment on X date.

You are taking a year off work without pay to attend a course in country A.

You have not changed your position while undertaking the study.

You are undertaking the course so that you are a more effective employee.

The course commenced on X date and you will complete the course on X date.

You will not receive an allowance and will not be reimbursed.

Your employer encouraged you to attend the course and allowed you to take 12 months leave without pay.

You have paid for stage 1 of the course and there are 4 stages in total. The second fee payment for stage 2 is due on X date.

You intend returning to your employment when you complete the course.

You would like to claim a deduction for the following costs:

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1936 section 82A

Reasons for decision

Tuition, teaching notes and accommodation, and flights to country A

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 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.

In your case, the completion of the residential training course will result in improved efficiency in the performance of your existing duties and maintain or improve that skill or knowledge. Thus, a clear connection can be found between the cost of the course (including accommodation) and the gaining of your income.

Self-education expenses that are allowable under section 8-1 of the ITAA 1997 and relate to a 'prescribed course of education', are limited in deductibility by subsection 82A of the Income Tax Assessment Act 1936 (ITAA 1936) to the net amount of self-education expenses that exceeds $250.

Accordingly, your claim for the self-education expense allowable to you will have to be reduced by $250.

Obtaining a visa, the cost of the visa and travel insurance

The expenses associated with obtaining a visa, the cost of the visa and travel insurance are not allowable deductions because they do not have the necessary connection with your income earning activities. Expenses associated with obtaining a visa include expenses such as flights.

While the expenses associated with obtaining a visa, the cost of the visa and travel insurance are necessary to attend the course, it does not follow that these expenses are deductible. They are private in nature and accordingly not deductible under section 8-1 of the ITAA 1997. As the cost of the visa is private in nature it follows that any expense associated in obtaining the visa is also considered to be a private expense.

Therefore, you are not entitled to a deduction for the expense incurred in obtaining a visa, the cost of the visa and travel insurance.

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