Private ruling: Deductions Self education
Date of advice: 29 April 2024
Published: 11 June 2024
Ruling period: Year ending 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Are you entitled to claim a deduction for expenses incurred for Activity 1 and Activity 2 training? | A1: No.

Relevant facts and circumstances: You obtained a degree in 20YY. After graduation you were employed as a XXXX worker, then a XXXX coordinator prior to the relevant financial year. You moved interstate and started working as a XXXX coordinator in the 20YY-YY financial year. After this position you chose to start working as a private XXXX worker with an ABN via a company. Part of your role as a XXXX worker is to assist the client in living their life more independently and achieve goals/experiences. As each client is different and would vary depending on their individual level of support required, your position at any one time can include work such as: • strengths based emotional/relational support, • capacity building around day to day living tasks, • regular exercise and movement, • transport/accompaniment to and from appointments/ commitments/social events, • assistance with life administration tasks/decisions, • shopping assistance • assistance around the house, assistance with food preparation, assistance with personal care • liaising/collaborating with family/other supports. You undertook study of different styles of Activity2. You started to use another practice called Activity 1 which is a sitting based practice. You undertook training in this later in the 20YY-YY financial year and received your qualification early in the 20YY-YY financial year. In the 20YY-YY financial year you relocated and started with another XXXX work provider. You have also started working as a XXXX with a focus on Activity 1 and Activity 2 classes.

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. Self-education expenses are deductible under section 8-1 of the ITAA 1997 where they have a relevant connection to the taxpayer's current income earning activities. Taxation Ruling TR 2024/3 Income tax: deductibility of self-education expenses incurred by an individual discusses circumstances in which self-education expenses are allowable. 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 (paragraph 22 of TR 2024/3). 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 their current income earning activities in the future', a deduction is allowable. However, as stated in paragraph 23 of TR 2024/3, no deduction is allowable for self-education expenses if the study will enable you to get 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. These expenses are incurred at a point too soon to be regarded as incurred in gaining or producing your assessable income. To be able to claim a deduction, the expenses must relate to your income earning activities at the time of incurring the expense (paragraph 72 of TR 2024/3). In determining whether a deduction is allowable for self-education expenses there would need to be an examination of how the courses are connected to your income earning activities at the time the expenses were incurred. In your case, at the time of engaging in the Activity 2 course your assessable income was derived from working as a XXXX coordinator. You were working as a private XXXX worker when you began the Activity 2 course. These courses did not have a sufficient connection with your duties at work at the time you were studying Activity 2 and Activity 2 for them to be deductible. While employment has been gained in the 20YY-YY financial year that utilises the skills learned within the Activity 2 and Activity 1 courses, this was after you incurred the expenses for the courses. You were not undertaking income-earning activities to derive assessable income related to the courses at the time you incurred the expenses. These expenses are not deductible in the 20YY-YY financial year.