Private ruling: Self-education expenses
Date of advice: 20 December 2017
Published: May 2018
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you entitled to a deduction for self-education expenses incurred in obtaining a Graduate Diploma of Legal Practice? | A1: No

Relevant facts and circumstances: In early 20XX you enrolled in a course for the Graduate Diploma of Legal Practice (the course). The course is designed to teach students the practical skills they need to be admitted as a solicitor. The course commenced in early 20XX and ended in late 20XX. You paid the course fees of $XX in full through FEE-HELP. The course provided a list of the subjects. At the time of enrolment you were employed by Department A (DA). You were employed as a relevant officer on a full-time basis. You worked for DA from late 20WW to early 20XX. You did not seek financial assistance from DA to undertake this course. At the time you enrolled in the course you were looking for other positions outside of DA and was hoping to leave DA very soon. Your course provider recognised your work for DA as satisfying the compulsory legal work experience requirements of the course. You commenced employment with Department B (DB) in early 20XX. You are employed as a policy officer.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: 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. 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 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). Similarly, if the study of a subject of self-education objectively leads to, or is likely to lead to an increase in a taxpayer's income from his or her current income earning activities in the future, a deduction is allowable. The decision in FC of T v. Maddalena 71 ATC 4161; 2 ATR 541 supports the Commissioner's view that no deduction is allowable if the study is designed to enable a taxpayer to open up a new income earning activity, whether in business or in the taxpayer's current employment. This would include studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. In your case, when you enrolled in your course it was your intention to leave your then current employer. This means that the course would not have, objectively, enabled you to maintain or improve your skills or lead to an increase in your income in your then current employment when you enrolled in the course. It could be seen as attempting to gain other employment. The predominant focus of the course was to learn the practical skills needed to be admitted as a solicitor. In regards to your employment with DB, your role does not require that you be admitted as a solicitor to fulfil your current duties. Therefore, you are not entitled to a deduction for self-education expenses for this course.