Private ruling: Self education expenses
Published: October 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to a deduction for self-education expenses? | A1: Yes

Relevant facts and circumstances: You have been employed as qualified medical technician for some years. Your role was to work as part of a team to provide medical procedures. To enable you to use other medical equipment in your employment you undertook a graduate program. You were encouraged by your employer to complete the course to enhance your current knowledge and skills and be multi skilled in your work duties. The course was full-time and because of the intensity of the course you worked on a casual basis during the course with your employer. You have since obtained full-time employment in the same field with another employer You have provided position descriptions for when you were employed by both employers.

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 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 discusses the circumstances under which self-education expenses are allowable as a deduction. Self-education expenses are deductible where they have a relevant connection to the taxpayer's current income earning activities. 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; (1961) 8 AITR 406). Similarly, if the study of a subject of self-education objectively leads to, or is likely to lead to an increase in a taxpayer income from his or her current income earning activities in the future, a deduction is allowable. However, no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to open up a new income earning activity, whether in business or in the taxpayers current employment. Such expenses of self-education are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income ( FC of T v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161). In your case, it is accepted that the course you undertook will maintain and improve the knowledge and skills that are required to perform your current employment duties. Consequently, the self-education expenses incurred in undertaking this graduate program have the necessary and relevant connection with the earning of your assessable income.

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