Private ruling: Work related self education expenses
Published: October 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

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

Relevant facts and circumstances: You are employed in the hospitality industry. You undertook a training course in relation to the operation of a remotely operated underwater vehicle (ROV). ROV's are unmanned vehicles that are tethered to a surface vessel and operated by a ROV pilot. They are used for numerous types of underwater projects.

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. For self-education expenses to be deductible they must have a relevant connection to the taxpayer's current income earning activities. Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business (TR 98/9) discusses the circumstances under which self-education expenses are allowable as a deduction. Paragraph 13 of TR 98/9 states that 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. Similarly, paragraph 14 of TR 98/9 specifies that 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, paragraph 15 of TR 98/9 states that the fact that the study will enable a taxpayer to get employment, to obtain new employment or to open up a new income earning activity is not a sufficient basis in itself for self-education expenses to be deductible. 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 earning assessable income. In your case, you are employed in the hospitality industry and have incurred an expense in relation to training on the operation of a ROV which is a remotely operated underwater vehicle. In this instance there does not appear to be any relevant connection to your current income earning activities. Based on the above, it is considered that the training or self-education you undertook did not relate to the skills or knowledge you have in your current income earning activity, will not maintain or improve your skills or knowledge in that activity and will not lead to an increase in the income you derive from your current occupation. Therefore, you are not entitled to claim a deduction for the expense you incurred in relation to the ROV training.

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