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

Ruling: Question and answer | Are you entitled to a deduction for expenses relating to a course of study? | No.

Relevant facts and circumstances: You are employed by a large organisation. You have commenced study. The course will equip you with skills in writing, understanding legal documents and other documents, communication report writing, analysis and presentations. You decided to undertake the course to enable future employment in other areas.

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 circumstances in which self-education expenses are allowable as a deduction. If your current income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables you to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction. If the study of a subject of self-education objectively leads to, or is likely to lead to, an increase in your income from your current income-earning activities in the future, the self-education expenses are allowable deduction. Paragraph 15 of TR 98/9 also mentions that no deduction is allowable for self-education expenses if the study is to enable you to obtain employment, to obtain new employment or to open up a new income-earning activity (whether in business or in your current employment). This includes studies relating to a particular profession, occupation or field of employment in which you are not yet engaged. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. In your case, you are employed by a large organisation. You have commenced a course of study. The course will equip you with skills in writing, understanding legal documents and other documents, communication report writing, analysis and presentations. You have stated in your application that the course will assist you in obtaining future employment. The expenses were not incurred in your current position or training for your current position, but to open up another field in future employment. The course does not have the relevant connection with your current position. The skills you may acquire from the course are general in nature and would be considered to be useful in a number of vocational areas but not specific enough to meet the requirements under section 8-1 of the ITAA 1997. Therefore your course study expenses cannot be claimed as a self education deduction under section 8-1 of the ITAA 1997.

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