Private ruling: Rental property - self-education - property investment mentoring program
Published: October 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for expenses incurred to enrol in a property investment mentoring program? | A1: No.

Relevant facts and circumstances: You own a number of rental properties. You incurred a fee to enrol in a property investment mentoring program. The program teaches investment strategies and is for investment property owners as well as people wanting to enter into the investment property market.

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

Reasons for decision: Summary: You can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income except where the loss or outgoing is private in nature (section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)). Taxation Ruling TR 98/9 sets out the circumstances in which self-education expenses are allowable as deductions, and states 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 expenditure must be incidental and relevant in the sense of having the essential character of expenditure incurred in the course of gaining or producing assessable income. There must be a sufficient connection between the expense and the operations or activities which gain or produce your assessable income. No deduction is allowable if the course of study is too general in terms of the taxpayer's income earning activities and there is not a sufficient nexus between the course of study and the income earning activity. In addition, no deduction is allowable if the course of study is designed to enable a taxpayer to open up a new income-earning activity. The expenses are considered to come at a point in time too soon to be regarded as being incurred in gaining or producing assessable income. In your case, you incurred expenditure to enrol in a property investment mentoring program. A significant portion of the content of the program is geared towards identifying property investment opportunities, and strategies to make the most of those opportunities, as opposed to skills in managing and maximising your income from your existing investment property portfolio. As such, the cost of the program comes at a point too soon be incidental and relevant to any income you derive from future investments in the property market. Also, the program is considered to be too general in terms of deriving rental income from your current rental properties, and therefore, the expenditure incurred on the program does not have a sufficient connection with your current income producing activities. The expenditure you incurred does not have the essential character of expenditure incurred in gaining or producing your assessable income. Accordingly, you are not entitled to a deduction under section 8-1 of the ITAA 1997 for the expense incurred to enrol in the program.