Private ruling: Self-Education Deductions
Date of advice: 20 October 2017
Published: March 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 01 July 2016

Ruling: Q1: Are you entitled to a deduction of self-education expenses for the costs you incurred to undertake a Bachelor of Nursing? | A1: No

Relevant facts and circumstances: You are employed as a personal care worker. Your duties include: ● Looking after old and disabled clients ● Bathing clients ● Changing bandages You are studying a Bachelor of Nursing Once completed your employer will promote you to a nursing position.

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

Reasons for decision: Summary: Work-related expenses generally fall for consideration under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). This section allows a deduction for losses and outgoings which are incurred in the course of gaining or producing assessable income, unless the losses or outgoings are of a capital, private or domestic nature. The Commissioner's view on the deductibility of self-education expenses is contained in Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses . In accordance with TR 98/9, expenses of self-education will satisfy the requirements of section 8-1 of ITAA 1997 if: ● a taxpayer’s income-earning activities are based on the exercise of a skill or some specific knowledge, and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge ( FC of T v. Finn (1961) 106 CLR 60;(1961 12 ATD 348) (Finn’s Case); or ● 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 their current income earning activities in the future ( FC of T v. Hatchett (1971) 125 CLR 494; 71ATC 4184; (1971) 2ATR 557 ( Hatchett’s Case). Therefore, provided there is sufficient connection between a course of self-education and current income earning activities, you are entitled to claim a deduction for your self-education expenses. However, self-education expenses will not be deductible if the study is intended to: ● enable you to get employment ● enable you to obtain new employment, or ● to open up a new income-earning activity (whether in business or in your current employment). Paragraph 48 of TR 98/9 refers to the decision of the High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541 ( Maddalena’s Case ). That case established that no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to get employment or to obtain new employment. The expenses would be incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. | Detailed Reasoning - Nursing: The course of study you undertook was a Bachelor of Nursing. The Administrative Appeals Tribunal has previously considered the issue of the deductibility of self-education expenses on a number of occasions, including in the context of personal carer’s undertaking nursing studies. The Tribunal, in Assefa v. Commissioner of Taxation [2009] AATA 2, made reference to the Australian Bureau of Statistics publication, Australian Standard Classification of Occupations in considering the relationship between different jobs. In the health care sector, the publication provides details in relation to three levels of occupation – “personal care and nursing assistants”, “enrolled nurse” and “registered nurse”. The Tribunal has noted that personal carer’s duties fell within the first classification, which dealt primarily with assisting patients with their daily living requirements - such as showering, dressing, eating, communicating and mobility - under the guidance of a registered nurse. In contrast, a registered nurse is required to perform duties such as planning and evaluating nursing care, assisting medical practitioners, observing and reporting on patients’ condition and supervising and coordinating the work of other health care workers such as the taxpayer. The Tribunal has concluded that an enrolled nurse and a registered nurse were nurses whereas a nursing assistant, or personal care assistant, were not. It is considered that your circumstances are such that it would be correct to apply the decision in Maddalenas Case . According to the facts provided as part of your application, your primary responsibility as a personal carer is assisting patients with their daily living requirements. While your position involves work within the health care sector, your role can be compared and contrasted with the duties of an enrolled nurse, as described in the Australian Standard Classification of Occupations. In your case, you commenced studying for your Bachelor of Nursing whilst you were employed as a personal carer. The course is designed to enable you to obtain employment in a nursing position. While we recognise that your study may assist you to perform some of your duties as a personal carer, the skills or knowledge acquired as a result of undertaking the Bachelor of Nursing goes beyond that required in your job as a personal carer. You are not currently employed as a nurse. Therefore, your study is not to enable you to maintain or improve skill or knowledge in a profession you are already engaged in. Therefore, the course cannot be said to have been undertaken to improve or maintain a specific skill or knowledge in a current income earning capacity, as the study provides you with skills in advance of those that you need to be a personal carer. The essential character of the expenses is that they were incurred to enable you to complete the course of education and earn assessable income from your future employment as in a nursing position. The self-education expenses are considered to have been incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. Consequently, your self-education expenses are not deductible under section 8-1 of the ITAA 1997.

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