Private ruling: Self education expenses
Ruling period: Year ended 30 June 2010 | Year ending 30 June 2011
Date scheme commenced: 1 July 2009

Ruling: Q1: Are you entitled to a deduction for self-education expenses you incurred in purchasing text books, stationary, travel expenses, computer and software for your Bachelor of Business? Answer Yes

Relevant facts and circumstances: You commenced a Bachelor of Business course full time majoring in management and marketing. The course was for three years. You later gained employment as a sales assistant at a retail store as a result of commencing your course. You undertook the course to improve the skills you are using in your employment such as marketing, merchandising and customer behaviour. In the 2009-10 financial year, you received a promotion as part time store manager working 30 hours per week. Your duties as a part time store manager included; · training and motivating new staff, · assist in merchandising, · creating and meeting sales targets, · contributing to marketing of the store, · assisting in advertising and · trial and provide feed back for new products regarding their design, functionality and price to suit the market. As a part time store manager you continued to use the skills and knowledge from your course in marketing, managing and motivating people, understanding profit and loss concepts as well as identifying target markets, stocking and merchandising. You were promoted to full time store manager after completing your degree. Your added duties included purchasing and ordering stock as well as managing staff. You received no allowance or reimbursement for your expenses. Your course fees are paid by HECS - HELP Your employer provided flexible working hours enabling you to study around your work in your own time. You have incurred the following expenses: · text books · stationary · car expenses to and from home/university · computer and software


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's 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 taxpayer's 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 Bachelor of Business degree will enhance the skills and knowledge that are required in the performance of your current employment duties as a store manager. You have also received a promotion and increase in pay upon the completion of your degree. Consequently, the self-education expenses incurred in undertaking this degree have the necessary and relevant connection with the earning of your assessable income. The cost of the textbooks, stationary, car expenses to and from home/university, decline in value of your computer and software are therefore deductible as self-education expenses under section 8-1 of the ITAA 1997. The necessary substantiation of your expenses needs to be kept in relation to any deduction claimed under section 8-1 of the ITAA 1997. Please note that the self-education expenses you can deduct may be subject to a reduction of up to $250 in accordance with section 82A of the Income Tax Assessment Act 1936. An explanation on how this provision operates is provided at paragraphs 119 to 155 of TR 98/9, which can be accessed on the Tax Office's website at www.ato.gov.au .

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | Relevant legislative provision: Income Tax Assessment Act 1997 Section 8-1.