Private ruling: Expenses - Self-Education
Published: August 2017
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you entitled to a self-education deduction for a self-development course? | A1: No.

Relevant facts and circumstances: Your employer is introducing a client care program. Roles of this program include: Promote and encourage culture, celebrate success Active promotion of a positive culture Model and promote core values Support employee communication Manage client programs throughout the year Employee's responsibilities include: Assisting with client organisation and wellbeing Supporting and encouraging leadership Celebrating milestones and achievements Communicating with others about client concerns or issues Engendering enthusiasm and participation in events Pathways discussions and referrals The course you undertook was a self-development course. The course aimed to produce the following outcomes: Improved interpersonal relationships leading to enhanced customer relations Greater clarity and communication Improved sense of self responsibility Ability to move beyond previous limitations Problem solving made easier Increased flexibility and acceptance of change Your employer did not direct you to do this course. Your employer has not contributed toward the costs associated with this course.

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 Income tax: deductibility of self-education expenses incurred by an employee or a person in business discusses circumstances in which self-education expenses are allowable as a deduction under section 8-1 of the ITAA 1997. If a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and the self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction. In addition, 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, the self-education expenses are allowable as a deduction. However, the decision of the High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541 establishes the principle that no deduction is allowable for self-education expenses if the study is to enable the taxpayer to get employment, obtain new employment or to open up a new income-earning activity (whether in business or the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. 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 expenses and the income-earning activity does not exist. In your case you participated in a self-development course. The course you undertook is related to your self-development with outcomes specific to personal attribute's and can be useful in your work with the care program. However, this course does not have the relevant nexus between it and the program implemented by your employer. This course is considered to be of a private nature and is not therefore directly related to your income producing activities. Accordingly, you are not entitled to a deduction for self-education expenses under section 8-1 of the ITAA 1997.