Edited version of private advice

Authorisation Number: 1052322118809

Date of advice: 23 December 2024

Ruling

Subject: Self-education expenses

Question 1

Are you entitled to a deduction for the self-education expenses incurred in completing an overseas course under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer 1

Yes.

You are entitled to claim a deduction for your self-education expenses, in the year the expenses were incurred. You have shown that there is sufficient connection between the course of self-education and your current income earning activities and it is accepted the study meets the requirements detailed in Taxation Ruling (TR) 2024/3 Income tax: deductibility of self-education expenses incurred by an individual.

Question 2

Are you entitled to a deduction for the Australia to Country A airfare expenses incurred in completing an overseas course under section 8-1 of the ITAA 1997?

Answer 2

No.

Question 3

Are you entitled to a deduction for the Country B airfare and accommodation expenses incurred in completing an overseas course under section 8-1 of the ITAA 1997?

Answer 3

Yes.

You are entitled to a deduction for your Country B airfare and accommodation expenses under section 8-1 of the ITAA 1997. You have shown that there is sufficient connection between the course of self-education and the expenses incurred and it is accepted that you were not living in Country B during that period.

This ruling applies for the following period:

Year ended XX XX 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

On XX XX 20XX you began full-time employment with Company A trading as the Company.

On XX XX 20XX you were appointed as a Senior Associate with the Company.

Your roles and responsibilities are as follows:

•                     Running project delivery

•                     Managing project teams

•                     Consultant coordination

•                     Design proposals

•                     Fee proposals

•                     Contract administration tasks

•                     Detail design and drawing

•                     Invoicing

•                     Problem solving

•                     Strategic planning

•                     Management meetings

•                     Business development

On XX XX 20XX you flew from Australia to Country A.

On XX XX 20XX you commenced a course of study.

The course is facilitated by Company B in Country A.

The course includes visits to several locations in Country A.

The course was facilitated X days a week over a three-month period.

On XX XX 20XX you completed the course.

Your employer did not specifically ask you to undertake the course, but you did it for professional development.

You didn't receive a scholarship, allowance, or government assistance to pay for the course.

The course was not paid via a Higher Education Loan.

You have not been reimbursed by your employer for any of the self-education, travel, or accommodation expenses.

You maintained your Australian residence while overseas.

While overseas you resided in hotels and short-term rental accommodation.

You did not live on campus while overseas.

While undertaking the course you flew to Country B to attend an event from XX- XX XX 20XX.

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 or relate to the earning of exempt income.

Expenses of self-education are generally deductible if:

•                     your income-earning activities are based on the exercise of a skill or some specific knowledge, and the subject of self-education enables you to maintain or improve that skill or knowledge or

•                     the study of a subject of self-education objectively leads to, or is likely to lead to, an increase in your income from your current income earning activities in the future.

Therefore, provided there is a sufficient connection between a course of self-education and your current income earning activities, you are entitled to claim a deduction for your self-education expenses.

However, self-education expenses will not be deductible if the study is intended to:

•                     enable you to get employment

•                     enable you to obtain new employment or

•                     open a new income-earning activity (whether in business or in your current employment).

Self-education expenses that are designed to enable a taxpayer to get employment or to obtain new employment are considered to be incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. Such expenses are therefore not deductible.

If a course of study is too general in terms of the taxpayer's current income-earning activities, the necessary connection between the self-education expense and the income-earning activity does not exist.

Self-education expenses that are generally considered allowable deductions may include:

•                     course or tuition fees of attending an educational institution (including student union fees, but excluding Higher Education Loan Program (HELP) repayments)

•                     the cost of professional and trade journals, textbooks, and stationery

•                     airfares incurred on overseas study tours, on work-related conferences or seminars, or to attend an educational institution

•                     accommodation and meal expenses where a taxpayer is away from home overnight, incurred on overseas study tours, on work-related conferences or seminars, or attending an educational institution.

Taxation Ruling TR 2024/3 Income tax: deductibility of self-education expenses incurred by an individual discusses circumstances in which self-education expenses are allowable.

Application to your circumstances

To determine whether circumstances exist that support your self-education deductions, it is necessary to determine whether there is a sufficient connection between you incurring the expense and your current income earning activities. Whether such a connection exists is a question of fact and is to be determined by reference to all the facts in your case.

You have submitted that you completed a course for the purpose of maintaining or improving the skills and knowledge required in your current employment duties with the Company.

Your claim for the course fees incurred fulfil the requirements because there is a sufficient connection between you incurring the expense and your current income earning activities. Therefore, you are entitled to claim a deduction for these expenses.

Australia to Country A Airfares

Taxation Ruling TR 2024/3 Income tax: deductibility of self-education expenses incurred by an individual paragraph 125 states:

Airfares incurred to participate in self-education, provided you are not living at the location of the self-education activity, are deductible.

Shortly prior to commencing the course, located in Country A you flew from Australia to Country A to for the duration of the three-month course. You travelled to some other locations during your time overseas however you returned to Country A as your 'home base' for the entirety of the trip.

Airfares are deductible when the expense is incurred to participate in a course of self-education which is related to your income producing activities. However, if you move to a new place to live while undertaking a course of self-education, the nature of the airfares becomes private and personal as the nexus between the airfare and your earning of assessable income is severed. You are not entitled to a deduction for the cost of your airfares under section 8-1 of the ITAA 1997.

Country B Trip

Airfares and Accommodation

Taxation Ruling TR 2024/3 Income tax: deductibility of self-education expenses incurred by an individual paragraph 130-132 states:

Similarly, accommodation and meal expenses you incur in connection with self-education will be private and domestic living expenses where you are living at the location of the self-education activity. 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.

XX XX 20XX you decided, on recommendation from your lecturers, to fly to Country B to attend an event. The purpose of your trip was to attend the event and view the represented outcomes of some of your lecturers works. This provided an opportunity to understand the outcome of the processes being taught in your course more deeply.

Your claim for the airfares and accommodation incurred fulfil the requirements because they were incurred in connection with your self-education activities, and you weren't residing at the location of the self-education activities. Therefore, you are entitled to claim a deduction for these expenses.