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

Ruling: Q1: Are you entitled to claim a deduction for self-education expenses? | A1: No


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: Self education expenses generally fall for consideration under section 8-1 of the Income Tax Assessment Act 1997 . This section allows a deduction for losses and outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent to which they are capital, private or domestic in nature. To be deductible under this section an expense must have the essential character of an expense incurred in gaining or producing assessable income or, in other words, of an income-producing nature. The Commissioner's view on the deductibility of self education expenses is contained in Taxation Ruling TR 98/9. In accordance with TR 98/9, expenses of self education are allowable if: · a taxpayers income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of self education enables the taxpayer to maintain or improve that skill or knowledge, and · the study of a subject of self education objectively leads to, or is likely to lead to, an increase in a taxpayers income from his or her current income-earning activities in the future. Costs of self education are not deductible 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. In such situations the expenses 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]. In your case you are employed in a particular profession. You are currently studying a course. This course will allow you to apply for a position in a specialised area with your current employer in the future. The studies you are undertaking do not maintain or improve an existing skill or knowledge used in your current income earning activities. Although you may gain some knowledge or skills from the subjects studied that could be of assistance in your work, there is insufficient nexus between your current duties and the subjects studied for a deduction to be allowable. In addition as a result of undertaking this course there is no indication your salary in your current position has or will increase in the future. The predominant focus of the course is to provide the skills to open up a new income earning activity. The incurring of these expenses has occurred at a point too soon to be deductible. You are therefore not entitled to a deduction for self education expenses.

Relevant facts: You are currently employed in a particular profession. | You are also currently attending university, studying a course. | This further education will allow you to apply for a position in a specialised area with your current employer in the future and will assist you in your current position. | Your employer does offer a course or any subsidies in relation to obtaining qualifications required for the role. | The degree is designed to provide you with the core skills needed for lifelong learning in your constantly changing work environment. | You started the degree in the relevant year and will finish late in the subsequent year.