Private ruling: Deductibility of self education expenses
Date of advice: 6 September 2016
Published: October 2016
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you entitled to a deduction for self education expenses relating to obtaining a civilian skydiving qualification? | A1: No.


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 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. The decision in FC of T v. Maddalena 71 ATC 4161; 2 ATR 541 supports the Commissioner's view that no deduction is allowable 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. This would include studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. In your case, there are positions available for officers at the parachute training school for which you could be considered for posting. You have the required skills and accreditation, to carry out your role in the Australian Defence Forces. Even by completing the civilian freefall training and receiving certification you would still require RPL and further training for your freefall certification and the possibility of gaining employment as an instructor. While we acknowledge that the knowledge and skills gained from undertaking the process of obtaining the civilian freefall accreditation could be of some assistance in providing a greater understanding of how parachutes work and their employment within Air Despatch this is not a requirement of your current position. It is considered that the predominant focus of obtaining a civilian freefall certification is to give you the ability to improve the possibility of you being posted into Air Despatch and ultimately to increase your opportunity in gaining parachute training and qualifications, culminating in your gaining a freefall instructor's position. As there is an insufficient nexus between the courses of self education and your current income earning activities, the self education expenses associated with the courses are not incurred in earning your assessable income. Consequently you are not entitled to a deduction for the expenses under section 8-1 of the ITAA 1997.

Relevant facts: You are a member of the Australian Defence Force. | You intend to undertake civilian freefall training with the possibility of the training being recognised under Recognition of Prior Learning (RPL) to allow you to gain your freefall certification and further training to increase your knowledge to be employed as an instructor and transferred to the parachute training school.