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

Ruling: Q1: Are you entitled to a deduction for the expenses incurred while completing your honours degree (the course)? | A1: No.

Relevant facts and circumstances: While undertaking the course you were employed part-time. As a part of the honours course you submitted a project which was unrelated to your current income earning activities. However, completion of the course may enable you to open up a new income earning activity in a role related to the project, which may increase your income earned. You have incurred expenses while undertaking the course, including course fees and fees associated with the project.

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 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. 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 ( FC of T v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161). Whilst we acknowledge that completion of the course may lead to an increase in assessable income from a new income earning activity relating to the project completed during the course, there is no connection between your current employment position and the course. The course of study is designed to enable you to open up a new income earning activity. Therefore you are unable to claim a deduction for the expenses incurred relating to the course, including the completion of the project, as they are considered to be incurred at a point too soon.