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

Ruling: Q1: Are you entitled to a deduction for self-education expenses in relation to course fees and airfares? | A1: Yes. | Q2: Are you entitled to a deduction for the decline in value of a computer used solely for self-education purposes? | A2: Yes.


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 the circumstances under which self-education expenses are allowable as a deduction. 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) 106CLR60, (1961) 12 ATD 348; (1961) 8 AITR 406). Similarly, if the study 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. In your case, it is accepted that the course of study will enhance your knowledge and skills in your current employment activities. Your self-education expenses are considered to have sufficient relevant connection to your income-earning activities you are entitled to a deduction under section 8-1 of the ITAA 1997 for eligible self education expenses. The purchase of your computer is a capital expense and is not deductible outright. However, you are entitled to claim depreciation for the decline in value. | Detailed Reasoning - Note: The self-education expenses you can deduct may be subject to a reduction of up to $250 in accordance with section 82A of the Income Tax Assessment Act 1936 . An explanation on how this provision operates is provided at paragraphs 119 to 155 of TR98/9, which can be accessed on our internet website at www.ato.gov.au.

Relevant facts: You are currently completing a degree. | The degree is directly related to your employment. | You are employed full time. | You undertook a subject overseas. | You undertook this subject during the summer semester. | You took annual leave whilst undertaking this subject. | You incurred the costs of undertaking this subject.