Edited version of private advice

Authorisation Number: 1052315865524

Date of advice: 10 October 2024

Ruling

Subject: Deductions - self-education expenses

Question 1

Are you entitled to a deduction for accommodation costs incurred while undertaking the study course as self-education expenses under section 8-1 of the ITAA 1997?

Answer

No.

Question 2

Are you entitled to a deduction for meal costs incurred while undertaking the study course as self-education expenses under section 8-1 of the ITAA 1997?

Answer

No.

Question 3

Are you entitled to a deduction for travel costs incurred between your accommodation and the campus while undertaking the study course as self-education expenses under section 8-1 of the ITAA 1997?

Answer

Yes.

Question 4

Are you entitled to a deduction for stationery, books, digital subscription and decline in value costs incurred while undertaking the study course as self-education expenses under section 8-1 of the ITAA 1997?

Answer

Yes.

Question 5

Are you entitled to a deduction for mobile phone roaming charge costs incurred while undertaking the study course as self-education expenses under section 8-1 of the ITAA 1997?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20xx

Year ended 30 June 20xx

The scheme commenced on:

1 July 20xx

Relevant facts and circumstances

You are employed with xxxx as a xx xx and xx xx.

You hold qualifications in xx and xx.

Your responsibilities in your role include:

•         test development, improvement and introduction of laboratory tests

•         review, validation and follow-up of laboratory results

•         interpret and communicate critical results

•         clinical consultation in xx to inpatients and outpatients

•         liaison with clinicians to provide advice on appropriate testing and interpretation of results

•         attend clinical meetings including xx stewardship, xx, clinical rounds and case discussions

•         teaching education programs in xx and xx to xx and xx students and xx in training with the xxxx and xxxx

•         supervision of scientific and technical staff

•         contribute to research and test development.

You are undertaking a twelve-week study course for a xx in xxxx at the xxxx, xx. There is no equivalent course in Australia.

The course is to teach the skills required to understand, diagnose, treat and prevent xx that are especially prevalent in xxxx. The course outcomes include: xxxx, xxxx.

The course will increase your specialised knowledge of xx, xx and xx and directly increase diagnostic capacity of xx, expand your teaching knowledge, broaden connections for collaborative research and improve clinical expertise. The course is expected to advance your salary level.

Your employer has provided a letter of support to attend to the study course.

Your employer provides professional development and training funding to the amount of $xx per academic year and you are eligible to apply for reimbursement of costs incurred for education purposes subject to your manager's approval.

Your employer has reimbursed you for xx costs, to the amount of $xx, and course fees, to the amount of $xx, for the study course.

The course runs from xx xx to xx xx 20xx.

You travelled to xx on xx xx and will depart for Australia on xx xx 20xx.

You have booked and paid in advance for a 2-bedroom Airbnb apartment in central xx for the entirety of the period you are overseas.

Your spouse and children will accompany you and will reside with you while you are undertaking the course in xx.

You are currently on paid leave. You will be on paid leave from xx xx 20xx while attending the course. You will return to work at xx on xx xx 20xx.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 subdivision 40-B

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, or relate to the earning of exempt income.

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).

Taxation Ruling TR 2024/3 - Income tax: deductibility of self-education expenses incurred by an individual sets out the rules and circumstances under which self-education expenses are allowable as a deduction.

Question 1

Are you entitled to a deduction for accommodation costs incurred while undertaking the study course as self-education expenses under section 8-1 of the ITAA 1997?

Detailed reasoning

No deduction is allowable for expenditure on accommodation and meals where a taxpayer has travelled to another location for self-education purposes and you are living in a new location. In this case, accommodation expenses would be regarded as private in nature.

Taxation Ruling TR 2024/3 states: If you are not away from home overnight for self-education connected with your income-earning activities, a deduction is not allowable for any living expenses you incur, such as meals or accommodation. This expenditure is a private or domestic living expense because it is incurred by you to maintain your usual residence or to consume food and drink as you go about your daily activities.

Accommodation and meal expenses are allowable where the taxpayer is required to be away from home overnight, but not where the taxpayer establishes a new home base.

This will apply regardless of whether the self-education allows you to acquire and improve the skills and knowledge you require to carry out your income-earning activities or leads to, or is likely to lead to, an increase in income from your income-earning activities.

The following factors indicate when your accommodation and meal expenses are private and domestic living expenses, and are not deductible:

•         the length of the overall period you will be away from your usual residence is a relatively long one

•         the nature of the accommodation is such that it becomes your usual residence

•         you are, or can be, accompanied by family or friends or visited by family or friends.

No single factor is decisive and the weight given to each of these factors will vary depending on your individual circumstances.

Application to your circumstance

You are staying in long-term accommodation, accompanied by your family and you are living in xx for the entirety of the study course. The Airbnb accommodation is considered to have become a new home according to the criteria set out int TR 2024/3 (see also example 37).

In your case, the accommodation expenses you incur in connection with the self-education study course will be private and domestic living expenses as you are residing at the location while you undertake the self-education activity.

Question 2

Are you entitled to a deduction for meal costs incurred while undertaking the study course as self-education expenses under section 8-1 of the ITAA 1997?

Detailed reasoning

No deduction is allowable for expenditure on accommodation and meals where a taxpayer has travelled to another location for self-education purposes and you are considered to be living in a new location.

Application to your circumstance

In your case, the meal expenses you incur in connection with the self-education study course will be private expenses as you are living at the location of the self-education activity. The expenses are excluded from deductibility because its essential character of private expenditure.

Question 3

Are you entitled to a deduction for costs incurred for travel between your accommodation and the campus while undertaking the study course as self-education expenses under section 8-1 of the ITAA 1997?

Detailed reasoning

Travel expenses such as costs for travelling to and from a place of education are claimable. Only those expenses directly attributable to the self-education incurred in gaining or producing your assessable income are allowable.

The Commissioner takes the view that, where the requirements for deductibility are otherwise met, the transport costs (e.g., fares) incurred in travelling between: (a) home and an educational institution (including a library for research) and back again; and (b) the place of work and the educational institution and back again, qualify as self-education expenses.

Question 4

Are you entitled to a deduction for stationery, books, digital subscription and decline in value costs incurred while undertaking the study course as self-education expenses under section 8-1 of the ITAA 1997?

Detailed reasoning

Self-education expenses incurred for professional and trade journals, digital subscriptions and stationery, including pens and photocopying are deductible.

If the subject of the self-education enables you to maintain or improve skills or knowledge or is likely to lead to an increase in income from your current income-earning activity, you can deduct an amount for the decline in value of the depreciating asset you use, or have installed ready for use, for self-education purposes. You must reduce your deduction by the extent to which you use the asset for other than a taxable purpose.

Reference books and textbooks that you use for self-education are generally deductible. Where the books, or sets of books, cost more than $300, you deduct an amount for decline in value. See paragraphs 158 to 162 of TR 2024/3 for more on decline in value instead of claiming a deduction in the year of purchase.

Application to your circumstances

In your case, it is accepted that the course will maintain or further develop your skills and knowledge required for you to perform your employment duties and expand your knowledge in areas relevant to your employment position. Consequently, the expenses you incur for stationery, books and digital subscription are deductible.

Question 5

Are you entitled to a deduction for mobile phone roaming charge costs incurred while undertaking the study course as self-education expenses under section 8-1 of the ITAA 1997?

Detailed reasoning

The work-related portion of the cost of portable electronic telecommunication devices (such as smartphones and tablets) may be deductible upfront by an employee (section 40-80(2), ITAA 1997) or depreciated (section 40-60, ITAA 1997) depending on the circumstances.

An employee may also deduct the unreimbursed cost of telephone calls and home internet use, to the extent these costs relate to the course of their employment. Evidence that an employer requires an employee to work from home, or to make work calls, supports a deduction claim.

An employee normally determines the work-related percentage of their phone and internet costs by establishing a pattern of use over a 4-week representative period. This is achieved by keeping diary records of work calls and work-internet use. The pattern-of-use percentage is then applied on a reasonable basis to the yearly costs, noting that leave periods are excluded (PS LA 2001/6).

Application to your circumstances

As you are currently on paid parental leave and will transition to long service leave while undertaking the course of study, deductions for use of your mobile phone, including roaming charges, while undertaking the study course and not at work are not deductible.