Edited version of private advice

Authorisation Number: 1052352376920

Date of advice: 21 January 2025

Ruling

Subject: Income deductions - self education allowances

Question 1

Can you deduct the course costs you incurred to undertake an MBA at XXXXX campus in Country B, under Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

You were employed as a Manager at XXX over the duration of your MBA course. The position description of your role confirms that the MBA has a clear connection to your income producing activities. Furthermore, you remained employed by XXX for the entire time you incurred MBA course fees.

As such, the course fees incurred to undertake the MBA will be deductible in the year in which the expenses were incurred.

Question 2

Can you deduct the airfare and accommodation expenses you incurred to travel from Country A to your course modules, which you incurred as part of your MBA, under Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

As there is a nexus between your income-earning activities and the MBA, you can deduct the airfare expenses and the accommodation incurred for your study modules.

However, other activities which are not directly related to your income-earing activities will be private in nature. For example, expenses relating to your travel, such as sightseeing and spending time with family are private in nature and you cannot claim a deduction for them.

These travel costs will be required to be apportioned on a fair and reasonable basis between time spent on study for your MBA and development for your current employed role, and private time such as sightseeing and spending time with family.

This ruling applies for the following periods:

Year ended DD/MM/20YY

Year ending DD/MM/20YY

The scheme commenced on:

DD/MM/20YY

Relevant facts and circumstances

You commenced your employment with Company A on DD/MM/20YY.

Your current position is a Permanent full-time Manager, XXXXX.

Your key role accountabilities at Company A fall under the following headings:

•                     Strategy

•                     Customer

•                     Governance & Risk

•                     People

•                     Financial authority

The required skills for this role are:

•                     Strategic mindset & experience in developing strategies and business plans with the ability to identify short and long-term opportunities utilising critical thinking and broad datasets

•                     Ability to work in highly collaborative way to bring complex set of inputs into a clear plan

•                     Strong commercial acumen

•                     Strong business acumen

•                     Ability to tell data-driven stories in a clear and concise narrative

•                     Analytical and Quantitative skills

•                     Pricing - Knowledge of the full spectrum of insurance pricing activities, practices, tools and considerations; ability to utilise these and various techniques to set prices for premiums of different insurance products and contracts

•                     Deep analytical skills, with high capacity to think strategically about complex issues, evaluate alternatives, and make compelling recommendations based on proven business

•                     Solutions Development - Knowledge of and the ability to assess customer needs and provide solutions for them

•                     Risk Improvement - Knowledge of risk control methods and techniques; ability to develop related plans and management programs to control losses at corporate and local levels

On DD/MM/20YY, you received a letter from XXXXX to inform you that you had been accepted as a participant in the XXXX MBA 25 Class, starting on DD/MM/20YY at the XXXXX campus in Country B.

The total cost of the course in Australian dollars was $XXX, of which you paid $XXX, your employer Company A paid $XXX and you received two XXXXX scholarships totaling $XXX.

You will complete a range core and elective courses.

You were granted XX months paid leave, consisting of XX months annual leave and XX-month long service leave, and the remainder of your leave will be unpaid leave.

You moved from Australia to Country A on DD/MM/20YY and initially resided in a service apartment for a few weeks, before renting a property, where you have been living since MM/20YY.

You moved to Country A with your spouse and child.

Prior to leaving Australia you were living in your own property, which you are currently leasing.

Between MM/20YY and MM/20YY, you had to travel from Country A to Country B, Country C, Country D and Country E to be able to complete your course studies.

On DD/MM/20YY, you travelled to Country B to complete an elective course, and your spouse and child joined you for the 2nd week, as you had planned a family holiday after completing your study.

You will graduate from this course on DD/MM/20YY.

You intend to return to Australia and return to your current employment role with Company A by DD/MM/20YY.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1