Private ruling: Deductions – self education expenses
Date of advice: 27 May 2019
Published: July 2019
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Are you entitled to a deduction for self-education expenses associated with undertaking a Bachelor of Education (Early Childhood)? | A1: No

Relevant facts and circumstances: You commenced a traineeship for Certificate III in Early Childhood as a school based Trainee. Whilst finalising high school you completed the traineeship. You completed high school. You were employed as a Support Educator during 201X and have commenced a Bachelor of Education at University on a full time basis. Your current employer has stated that upon completion of your Bachelor of Education (Early Childhood), you would then be able to accept another position at the Child Care Centre. You do not receive any financial or other support from the Day Care Centre for your studies.

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 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. 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 taxpayers 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 (see Federal Commissioner of Taxation v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161; and paragraphs 15, & 48 62 of TR 98/9). In your case, there is insufficient connection between the course you will be completing with your income producing activities however the study has enabled you to open up a new income earning activity.