Private ruling: Self-education
Published: September 2014
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to a deduction for the cost of obtaining a licence? | 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 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 the circumstances under which self-education expenses are allowable as a deduction. 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. 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 their current income earning activities in the future, a deduction is allowable. However, no deduction is allowable for self-education expenses if the study is to enable a taxpayer to get employment, to obtain new employment, or to open up a new income-earning activity (whether in business or in 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. Although you may gain some knowledge and skills from the subjects studied that could be of some assistance in your work, the predominant focus of the course is to provide the skills to become fully qualified in a different part of your field of employment or in your case, to be promoted to another job. It is considered that there is an insufficient nexus between the skills and knowledge required in your current duties and the course that you have undertaken. As there is an insufficient nexus between the course of self-education and your income earning activities, the expenses associated with the course are not incurred in earning your current assessable income. Consequently you are not entitled to a deduction for the expenses.

Relevant facts: You are employed and your duties do not include a particular task. | You are seeking a promotion which would require a licence in combination with your current skills. | You are undertaking training to attain a licence.