Private ruling: Self-education expenses
Date of advice: 30 August 2017
Published: December 2017
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 September 2015

Ruling: Question and answer | Are you entitled to a self-education deduction for your course fees? | No.

Relevant facts and circumstances: You are a professional. You undertook a course overseas. You paid for this course out of your own pocket.

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 undertook a course overseas. You have trained as and work as a professional. The course was undertaken by you so you could gain skills in leadership to pursue a career in leading endeavours in your profession. You do not need the course to perform your duties as a professional. While the course may be useful in terms of your work as a professional it is not a requirement of your current employment as a professional to have the course qualification. The Commissioner is not satisfied that there is a sufficient connection between the skills and knowledge required in your current position a professional and the course. Accordingly, you are not entitled to a deduction for the course fees.