Edited version of your private ruling

Authorisation Number: 1012547404931

Ruling

Subject: Self education expenses

You are an employee of the Public Service.

You have approved funding from your employer to attend the course.

You studied the course overseas, through an Australian University.

The course ran for approximately one week.

You incorporated annual leave with the course.

You incurred airfare expenses, travel insurance costs and accommodation expenses on your trip.

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 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. There must be a relevant connection between the self education and the income-earning activity.

Your employer also supports this notion. Therefore we accept that the attendance at the conference has the necessary and relevant connection with the earning of your assessable income.

Airfare expenses

Paragraph 111 of TR 98/9 specifies that airfares incurred to attend overseas study tours, educational institutions, conferences or seminars related to the income-earning activity are deductible. However paragraph 66 of TR 98/9 states if the travel is undertaken for both income-earning purposes and for private purposes, the expenses should be apportioned.

Prior to your departure your intention is to also holiday overseas. You notified your employer of your intention to use your annual leave whilst you were overseas and you have kept a travel diary and the relevant receipts. It is evident that prior to your departure there was a dual purpose to the trip, one related to your employment and the other private.

Travel expenses

You can claim travel expenses to the extent they relate to your course.

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, the Tribunal held that his claim for travel insurance was expenditure of a private and domestic nature. Expenses such as insurance policies invariably cover items that are generally private in nature, for example illness, loss of baggage, and theft or damage to belongings.

You are therefore not entitled to a deduction for travel insurance under section 8-1 of the ITAA 1997 as the expenditure is private in nature.

Accommodation and meal expenses

The cost of meals and accommodation is generally a private and non-deductible expense. However, if you are participating in self-education directly connected to your current work and that self-education requires you to be temporarily absent for one or more nights from your home, you may claim the cost of meals and accommodation during that absence as per paragraph 88 of TR 98/9.

Your accommodation and meal expenses incurred during the period where you are attending the course is deductible as it is incurred while participating in an activity directly relevant to your current work.

Apportionment of deductible expenses

In section 8-1 of ITAA 1997 the words 'to the extent to which' signify that an expense may be apportioned if it is only partly incurred to produce assessable income. In Ronpibon Tin v FC of T (1949) 78 CLR 47; 4 AITR 236 (Ronpibon Tin) the High Court stated that the actual apportionment of expenses must be based on the facts of the case and '...there must be some fair and reasonable assessment of the extent (to which the outlay relates to) assessable income.'

TR 98/9 provides guidance on the apportionment of travel expenses incurred in connection with self-education. Specifically the ruling provides that if the travel was mainly devoted to a private purpose (such as a holiday), and the gaining or producing of income was merely incidental to the private purpose - only those expenses directly attributable to the income-earning purpose would be deductible.

You therefore should apportion your expense on a work/private percentage

Conversion of expenses to Australian currency

You must convert all foreign deductions to Australian dollars before including them in your income tax return.