Private ruling: Self-education expenses
Published: June 2013
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Where you have the necessary substantiation, are you entitled to a deduction for self-education expenses in relation to a semester of your studies undertaken overseas? | A1: Yes.


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 the circumstances under which self-education expenses are allowable as a deduction. A deduction is allowable for self-education expenses if a taxpayers 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. In your case, you were employed, the completion of the studies assisted you in carrying out your daily duties and increased your prospects of gaining higher duties and also resulted in a pay increase upon your return to the workplace. As the studies enhanced your existing skills and knowledge, a deduction is allowable for the self-education expenses you have incurred in relation to undertaking a semester of your studies overseas. Please ensure you have the necessary substantiation including a travel record before any deduction is claimed. | Detailed Reasoning - Limit on deductibility Section 82A: 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 Taxation Offices Internet website at www.ato.gov.au .

You completed a course that is relevant to your employment duties. | Some of your studies were completed overseas. | You remained an employee while studying overseas for the few months. | You took a small amount of annual leave at the commencement of your study and then unpaid leave for the remainder of your time overseas. | You returned to full time employment on your return to Australia. | Your employer did not provide you with paid study leave. | You understand that due to the contribution you made following your study overseas, you received an increase in your base salary and an annual performance bonus. | You incurred expenses while overseas which include travel, meals and accommodation.