Private ruling: Self-education expenses
Published: March 2015
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Question and answer | Are you entitled to a deduction for the costs associated with undertaking a management subject? | Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are an ongoing full-time employee. You are employed as a human resources officer. Your duties include: • advising and providing administrative support across operational and administrative programs in workplace relations, staff movements, staff numbers, performance management, and recruitment • creating and maintaining electronic databases and logs • administering regional and enterprise agreement programs, including reimbursement programs • providing administrative support, including compiling statistical reports reflecting employee work history • providing weekly and fortnightly staffing reports to regional manager and program directors • providing reports on employee numbers and recruitment forecasting, as required, for departmental review You are undertaking a Bachelor of Business and Commerce degree. You have completed a management subject as part of this degree. The learning goals associated with this unit are to: 1. Define management and summarise the evolution of management ideas on how managers may influence, people, organisations and their contexts to achieve organisational goals. This includes an awareness of the cultural contexts of the original source, development and contemporary application of management theory and practice 2. Identify and discuss contextual factors in the organisation's environment that impact on how people, managers and organisations interact 3. Describe how decision-making, planning, leading, organising and controlling can be managed in organisations 4. Examine the impact on individuals and organisations of contemporary issues in management including, stakeholder interests, ethics and social responsibility 5. Apply the skills of academic writing, research, questioning and analysis required of the management discipline. 6. Demonstrate in individual summative assessment tasks the acquisition of a comprehensive understanding of the topics covered. As a human resources officer, people management, managerial ethics and employee-management interaction formed the major functions of your role. Some specific examples occurred, for example, you delivered training sessions to employees and managers on personal leave usage and the department's efforts to reduce unplanned absences. The people management skills you required to deliver and explain this were enhanced by completing this management subject, as it allowed you to understand the motivations of unplanned employee leave use and the managerial responses that encouraged employee attendance. By researching practical examples through your studies, you were able to suggest workplace adjustments to encourage attendance, notably by improving the communication between employees and managers. Your immediate knowledge of organisational structures, as a result of completing this management subject, allowed you to suggest lower-level modifications to key programs that included team, matrix and project structures. You were able to provide the pros and cons of each structure as a result of your academic knowledge and research that encouraged increased employee performance and managerial interaction. Your employer provided you with paid leave for both study and to attend exams. Undertaking the course has been a factor in you achieving temporary higher acting positions.

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 have undertaken a degree and have completed a management subject as part of this degree. The Commissioner is satisfied that there is a sufficient connection between the skills and knowledge required in your current duties and the one management subject that you have undertaken. Accordingly, you are entitled to a deduction for the costs associated with the management subject.