Private ruling: Self education expenses
Date of advice: 29 September 2016
Published: November 2016
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: July 2015

Ruling: Q1: Are you entitled to a deduction for self-education expenses for a post graduate diploma course? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1936 Section 82A

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 Income tax: deductibility of self-education expenses incurred by an employee or a person in business (TR 98/9) provides the Commissioner's view for the circumstances under which self-education expenses are allowable as a deduction. TR 98/9 provides 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 (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; TR 98/9). You commenced post graduate diploma course to gain a formal qualification for use in carrying on your income earning activities. In your case, there is sufficient connection between the course you commenced and your current income producing activities. You undertook the program to enhance your existing capabilities, skills and knowledge that are required in the performance of your current employment. Consequently, the self-education expenses incurred in undertaking this program have the necessary and relevant connection with the earning of your assessable income and are deductable under section 8-1 of the ITAA 1997. | Detailed Reasoning - Additional information: In certain circumstances you may have to reduce your allowable self-education expenses by an amount greater than $200. However you may have other types of expenses some of which are not allowable as a deduction that can be offset against the amount greater than $200 before you reduce the amount you can claim for allowable expenses. For more information on how to work out your self-education expenses, search for Quick Code (QC) 31970 at ato.gov.au .

Relevant facts: You are an Australian resident for tax purposes. | You are undertaking a postgraduate diploma course through an accredited training provider. | The course is undertaken in order to gain a formal qualification for use in carrying on your profession. The diploma will improve your work skills. | It will increase your role potential and your income earning capacity with your employer, and will allow you to take on additional shifts covering your area of expertise. | Your participation in the course has been noted in your annual performance review with your employer. While your course of study is not specifically required by your employer, it follows requirements on your position statement. The course is taken part time. | Your current work responsibilities and duties include tasks directly commensurate with those skills studied in the course. | In addition to this formal qualification, you have attended additional other work related courses at your workplace. | The course is a continuous, integrated course without discrete subjects or electives, and all lectures and assessments are compulsory for all students. The course is structured as an online course which you undertake after hours. As such, you have not required any leave or assistance to participate in this course.