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Ruling

Subject: Self-education - overseas travel

Question 1

Are you entitled to claim a deduction for self education expenses?

Answer: Yes.

Question 2

Are you entitled to a deduction for your airfares and transfer fees for travelling to country A to undertake the course?
Answer: Yes.
Question 3

Are you entitled to a deduction for accommodation and meal expenses when you attend the course in country A?

Answer: Yes.

This ruling applies for the following periods:

Year ending 30 June 2012
Year ending 30 June 2013

The scheme commenced on:

1 July 2011 

Relevant facts

You hold a number of qualifications.

You are employed as a manager.

You intend undertaking the course with an education institution in country A.

Your reason for undertaking the course is to update your knowledge in your field of employment.

You intend to travel alone to country A to undertake the course.

You intend to stay in residential accommodation provided by the education institution.

You will not receive any allowances or reimbursements for the expense incurred in undertaking the course.

You intend to take annual leave or leave without pay to attend the course.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1
Income Tax Assessment Act 1936 Section 82A.

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.

The deductibility of your overseas travel is considered under general self-education principles outlined in Taxation Ruling TR 98/9. In accordance with TR 98/9, expenses of self-education are allowable 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.
In your case it is accepted that the course will maintain or enhance the skills and knowledge that are required to perform your duties. Consequently, the self-education expenses incurred in undertaking the course have the necessary and relevant connection with the earning of your assessable income.

Travel, accommodation and meal expenses are generally private or domestic in nature. However, there can be instances where these expenses can relate to a work-related activity. TR 98/9 explains that a deduction for accommodation, meals and travel to a work-related self-education activity are an allowable deduction under section 8-1 of the ITAA 1997 to the extent that the expenses are incurred in gaining or producing your assessable income.

Airfares and transfer fees
TR 98/9 provides that airfares incurred on overseas study tours or sabbatical, on work related conferences or seminars or attending an educational institution are deductible under section 8-1 of the ITAA 1997. They are considered part of the necessary costs of participating in the tour or attending the conference or seminar or the educational institution.

In your case, you are required to travel to country A to study for the course. The airfares and transfer fees are considered part of the necessary costs of attending the educational institution. Accordingly, a deduction is allowable for your airfares and transfer fees in relation to your trips to country A under section 8-1 of the ITAA 1997.

Accommodation and meals
TR 98/9 considers occasions where accommodation expenses may have the essential character of an income-producing expense where the expenditure is incurred while away from home overnight in connection with a self-education activity, the accommodation expenses incurred may be deductible under section 8-1 of the ITAA 1997.

In your case, your accommodation and meal expenses you incur in country A to study for the course are considered part of the necessary costs of attending the educational institution. Accordingly, a deduction is allowable for your accommodation and meals in relation to your trips to country A under section 8-1 of the ITAA 1997.
Additional Information

Note: The self-education expenses you can deduct may be subject to a reduction of up to $250 in accordance with section 82A of the Income Tax Assessment Act 1936. An explanation on how this provision operates is provided at paragraphs 119 to 155 of TR 98/9, which can be accessed on the Australian Taxation Office's website.