Edited version of your private ruling

Authorisation Number: 1012445369584

Ruling

Subject: Self education expenses

Question 1

Are you entitled to a deduction for the course fees and the associated travel, meals and accommodation expenses?

Answer

Yes.

Question 2

Are you entitled to a deduction for your travel insurance, immunization and the costs of culturally appropriate clothing when attending the course?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2013

The scheme commenced on

1 July 2012

Relevant facts

The arrangement that is the subject of the Ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are:

§ the application for private ruling, and

§ a copy of the course acceptance letter, course outline and timetable.

You are employed as a professional.

Your current duties require you to be a technical adviser.

You enrolled in a course to help you with your work. Your studies required you to complete a short course overseas.

You incurred the following expenses:

§ course fees

§ travel

§ meals and accommodation

§ travel insurance

§ travel immunization, and

§ culturally appropriate clothing.

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.

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).

Similarly, 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, a deduction is allowable.

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 expenses incurred in undertaking the course 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.

Expenses incurred for your course fees, travel, meals and accommodation are allowable deductions under section 8-1 of the ITAA 1997.

Travel insurance

In Case T78 86 ATC 1094 the Administrative Appeals Tribunal allowed a deduction to a barrister for airfares to attend a work related course. However, his claim for travel insurance was found to be expenditure of a private and domestic nature and therefore not deductible. Travel insurance policies invariably cover items that are generally private in nature, for example, illness, loss of baggage and theft or damage to belongings.

The expense incurred for your travel insurance is not an allowable deduction under section 8-1 of the ITAA 1997 as it is considered to be private in nature.

Travel immunization

Generally, a deduction is not allowable for the cost of vaccinations to protect against infectious diseases as this is a personal medical expense and, therefore, of a private nature.

Taxation Ruling TR 95/15 provides that a deduction is not allowable for the cost of vaccinations to protect employees against the risk of contracting infectious diseases in the work place as the expense relates to a personal medical expense, and is therefore of a private nature.

In your case, although vaccinations may be recommended or required for your overseas course and travel, the expense is private in nature and therefore no deduction is allowable under section 8-1 of the ITAA 1997.

Culturally appropriate clothing expenses

Expenditure on clothing is generally treated as a private expense and therefore not deductible under section 8-1 of the ITAA 1997. 

There are some circumstances, however, where a deduction can be claimed for certain types of work related clothing.

Taxation Ruling TR 97/12 provides that a deduction is allowable for the cost of buying, hiring or replacing clothing, uniforms and footwear (collectively referred to as clothing) if:

§ the clothing is protective in nature,

§ the clothing is occupation specific and not conventional in nature,  

§ the clothing is a compulsory uniform (criteria for which are outlined in Taxation Determination TD 1999/62), or 

§ the clothing is a non-compulsory uniform or wardrobe that has been entered on the Register of Approved Occupational Clothing.

A deduction under section 8-1 of the ITAA 1997 is allowable for the cost of purchasing clothes that fall into one or more of the four categories above.

In your case, although appropriate clothing may be required when travelling overseas, such clothing does not fall into one of the above categories. Your clothing expenses are not sufficiently connected to the course or your income earning activities to be an allowable deduction. Furthermore, the expense is regarded as private in nature and no deduction is allowed.