Edited version of private advice

Authorisation Number: 1052119514871

Date of advice: 23 May 2023

Ruling

Subject: Deduction - self-education and related expenses

Question 1

Are you entitled to claim all the net Course fees?

Answer

Yes.

The Course fees above the reimbursed amount received from your employer can be deducted.

Question 2

Are you entitled to claim any deduction in relation to the services and amenities fees charged in relation to the Course?

Answer

Yes.

Question 3

Are you entitled to claim deductions for all motor vehicle expenses and toll fee amounts?

Answer

No.

You can fully claim deductions for these expenses when the trip was from your home to place of education and then return to your home. However, you can only claim a deduction for these expenses in relation to your travel from your workplace to City X and not for the return trip to your home for trips where you departed from your workplace and returned to your home.

Question 4

Are you entitled to claim a deduction for the accommodation and parking costs incurred in relation to the Course?

Answer

Yes.

This ruling applies for the following period:

Income year ending 30 June 20XX.

The scheme commenced on:

1 July 20XX.

Relevant facts and circumstances

Employment

You have been employed in your current position by Organisation X for several years.

Your position involves the following duties:

•         Working closely with the head of teams to manage the communications contribution to national campaigns and advocacy programs

•         Writing, editing and reviewing content generated for a variety of purposes

•         Managing proactive and reactive media

•         Performing a leading role in internal communications, managing relationships and ensuring regular communications between communications personnel

•         Performing a leading role in managing multiple digital platforms, including social media, e-communications, websites and blogs

•         Responding to day-to-day requests for information from the general public as needed

•         Contributing to the day-to-day operation of teams as required; and

•         Other duties as directed.

You commenced a university graduate certificate (the Course) to improve your skills in relation to your current position which involves the managing of two staff members, leading and delivery of communications projects and managing stakeholders.

Referee reports were submitted from several Organisation X personnel to provide personal recommendations for your admission into the Course.

The Course is undertaken over two semesters, with two units being completed in each semester. Each unit involves two non-consecutive weekends of in-person attendance at the university campus (the Campus) from 9am to 5pm Saturday and Sunday.

During the ruling period you have completed two units in relation to Semester 1 which relate to your current employment by:

•         improving your effective leadership skills in relation to actively managing staff and the projects you manage in your role

•         working with senior leadership; and

•         gaining skills in relation to delivering projects and producing communications for your employer.

Your employer does not offer any study leave as a formal arrangement, but your manager has expressed that the workplace is happy to be flexible if needed for study purposes and your expectation is that if requested, they would oblige with any specific flexibility to support you completing the Course. Your employer has allowed you:

•         leave your workplace slightly earlier on Fridays so that you could travel to City X; and

•         to take annual leave on several days to study.

You are self-funding the costs incurred in relation to the Course, paying the course fees for the two units in relation to Semester 1 units upfront and not deferring to FEE-HELP. You also incurred services and amenities fees.

You applied for and were granted an amount under your employer's personal development program and have used the amount as a partial reimbursement for the course fees you had incurred.

You incurred the following costs in relation to travelling to City X to attend the weekend sessions at the Campus:

•         Motor vehicle expenses and toll fees when you travelled to City X on four occasions as follows:

­   Two trips you where you departed from your home to travel to City X (first leg) and the travelled from City X to your home (second leg); and

­   Two trips where you departed from your workplace to travel to City X (first leg), and then travelled from City X to your home (second leg).

You incurred toll fees on the inbound and outbound legs of your trips.

•         Accommodation for two nights' accommodation for each weekend you travelled to City X, and parking costs incurred to park near the accommodation venues.

You have not kept any records in relation to any costs of meals incurred during your travel and do not intend to claim any deduction for them.

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 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.

The deductibility of self-education expenses falls for consideration under section 8-1 of the ITAA 1997.

Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business sets out the circumstances in which self-education expenses are allowable as outlined below:

12. Self-education expenses are deductible under section 8-1 where they have a relevant connection to the taxpayer's current income-earning activities.

13. 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.

14. 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.

You incurred expenses in relation to completing the Course which we have considered as follows:

Course and services and amenities fees

Paragraph 85 of TR 98/9 states that course or tuition fees incurred in attending an educational institution or attending work-related conferences or seminars, including student union fees, are allowable under section 8-1 of the ITAA 1997.

If you meet one of the eligibility requirements as listed above, you can claim a deduction for student services and amenities fees.

Application to your situation

You paid the course fees in relation to the units you completed in Semester 1 and an amount for services and amenities fees. You received a payment from your employer under their personal development program for the reimbursement of some of the course fees.

It is accepted that the Course will maintain and enhance the skills that are required in the performance of your current employment with Organisation X, and it has sufficient connection to the earning of your assessable income.

Therefore, net Course fees in excess of the amount you received from your employer as a reimbursement for the Semester 1 Course fees will be deductible.

You are also entitled to claim a deduction for the student and services amenities fees paid in relation to Semester 1 of the Course as it was an incidental cost incurred in relation to completing the Course.

Motor vehicle expenses and toll fees

Paragraph 160 in TR 98/9 outlines that costs incurred in travelling from the place of employment or business to the place of education and return, or from home to the place of education and return will be eligible for deduction under section 8-1 of the ITAA 1997 if the costs of self-education are eligible for deduction.

Specifically, the Commissioner's view in relation to the deductibility of motor vehicle expenses is contained in paragraphs 11(d), 13(c), 43 and 44 of Taxation Ruling TR 92/8 Income tax: deductibility of self education expenses which was withdrawn by TR 98/9 except for those paragraphs.

The above paragraphs in TR 92/8 outline that if your self-education expenses have a sufficient connection to earning income from your employment activities, you can claim motor vehicle expenses for both trips, being the first leg and second leg, when you travel from your:

•         home to your place of education (first leg) and back home (second leg); or

•         work to your place of education (first leg) and back to work (second leg)

However, you can only claim the first leg of your trip when you travel from your:

•         home to your place of education (first leg) and then to work (second leg); or

•         work to your place of education (first leg), and then home (second leg).

The second leg of these trips is viewed as being private, therefore you can't claim a deduction for the motor vehicle costs you incur in relation to those parts of any trip.

Application to your situation

You incurred car expenses and toll fees when travelling inbound and outbound to City X in relation to the four occasions you travelled to attend the Campus in relation to completing Semester 1 of the Course as follows:

•         two trips where you departed from your home to travel to City X (first leg) and then travelled from City X to your home (second leg); and

•         two trips where you departed from your workplace to travel to City X (first leg) and then travelled from City X to your home (second leg).

In accordance with the principles contained in TR 92/8, you:

•         You can claim a full deduction for the car expenses and toll fees incurred for the two trips where your departure and final destination were your home, that is for the first and second legs of the trips: and

•         You can only claim a deduction for the car expenses and toll fees associated with the first leg of the trips when you departed from your workplace to travel to City X, but then returned to your home in relation to the second leg.

Accommodation and parking expenses

Paragraph 88 of TR 98/9 outline that expenditure on accommodation ordinarily has the character of private or domestic expenses. However, the occasion of the outgoing may operate to give the expenditure the essential character of an income-producing expense. An example is where the expenditure is incurred while away from home overnight on a work-related activity.

Paragraph 89 of TR 98/9 outlines that where a taxpayer is away from home overnight in connection with a self-education activity, accommodation expenses incurred are deductible under section 8-1 of the ITAA 1997, as 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.

Application to your situation

You travelled to City X on Fridays and stayed in accommodation for two nights so that you could attend the Campus from 9am to 5pm on Saturdays and Sundays before returning to your home. You also incurred parking costs to park near the accommodation venues.

As you incurred the expenses in relation to your accommodation, and parking near those venues, for the sole purpose of enabling you to complete the Course, it is viewed that those expenses were necessary and were not private in nature as you had travelled away from your home on income producing activities.

Therefore, as those expenses were incidental costs incurred in relation to the completion of the Course, you can claim a deduction for the costs of accommodation and parking you incurred in relation to staying in City X while completing Semester 1 of the Course.

Conclusion

You can claim deductions for the following expenses incurred in relation to the Course:

•         The net Course fees, being the excess of the Course fees incurred in relation to Semester 1 over the reimbursed amount you received from your employer

•         The amount paid for student and services amenities fees

•         The car expenses and toll fees incurred in relation to the two trips where you departed and returned to your home, and

•         Only the car expenses and toll fees attributable to the first leg of each of the two trips when you departed from your workplace and returned to your home.

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