Self education expenses: deductibility of meals and accommodation

Can a taxpayer claim a deduction for the costs of meals and accommodation incurred in relation to undertaking a degree course at an overseas educational institution under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

No. The taxpayer cannot claim a deduction for the cost of accommodation and meals incurred in relation to undertaking a degree course at an overseas educational institution under section 8-1 of ITAA 1997 because the expenses are of a private or domestic nature.

The taxpayer was employed by a company that has international operations.

The taxpayer undertook a two year degree course at an overseas educational institution whilst on unpaid leave from the company. The taxpayer worked for their employer during some of the term breaks from university.

The course was tailored to: • include subjects related to the business activity of the taxpayer's employer; and • stress the relevant skills of significance to the business activity of the taxpayer's employer.

The taxpayer expects a higher salary upon resuming full time employment after the completion of the education course.

During the course of study, the taxpayer resided in long term accommodation at the overseas location.

In addition to the various expenses associated with an overseas education course, such as airfares and tuition fees, the taxpayer also incurred accommodation and meal costs.

The taxpayer did not maintain a residence in Australia and has put their possessions in storage while not in the country.

Section 8-1 of the ITAA 1997 allows a deduction for all losses or outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent that they are outgoings of a capital private or domestic nature.

Taxation Ruling TR 98/9 acknowledges that self-education expenses are deductible under section 8-1 of the ITAA 1997 where they have a relevant connection to the taxpayer's current income-earning activities.

The deductibility of accommodation and meals cost when away from home was considered in Roads and Traffic Authority of New South Wales v. F C of T (1993) 43 FCR 223; 93 ATC 4508; (1993) 26 ATR 76. Hill J stated that: 'An employee who had no private home and was employed indefinitely to work at a particular site and did in fact work for the whole of his employment at that site, might be said to have chosen to live at the site so that the cost of his accommodation there would be private.'

The two year duration of the degree course, the long term nature of the accommodation at the overseas location and the non maintenance of a private residence in Australia are evidence that the taxpayer had established a new home at the overseas location.

Accordingly, the meals and accommodation expenses are not deductible as self-education expenses under section 8-1 of the ITAA 1997 as they are considered to be of a private or domestic nature.