Private ruling: Self education
Published: November 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for self-education expenses under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: 

Relevant facts and circumstances: You are completing a graduate certificate. You study part-time online. You have incurred expenses for tuition fees, air fares, bus fares, textbooks and stationary during the 2013-14 financial year. You are employed as a customer service representative. You provide general guidance in relation to telephone queries.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1

Reasons for decision: Summary: Section 8-1 of the 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 ( FCT v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348). However, paragraph 12 of TR 98/9 states that no deduction is allowable for self-education expenses if the study is to enable the taxpayer to get employment, obtain new employment or to open up a new income-earning activity (whether in business or the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field or employment in which the taxpayer is not yet engaged. Several court cases have established general guidelines in determining the deductibility of self-education claims. The decision in FCT v. Maddalena (1971) 2 ATR 541; (1971) 45 ALJR 426; 71 ATC 4161, supports our view that no deduction is allowable for self-education expenses if the study, viewed objectively, is designed to enable a taxpayer to get employment or to obtain new employment. Such expenses would come at a point too soon to be properly regarded as incurred in gaining assessable income. Application to your circumstances In your case, you are employed as a customer service representative. The duties you are required to carry out in your role are general in nature relative to the subsequent specialised study that you are undertaking. It may be argued that you will utilise this more specialised knowledge generally in your current role. However, when viewed objectively, this course is designed to enable you to obtain employment in a new role rather than assist you in performing your duties as a customer service representative. Therefore, you are unable to claim self-education expenses under section 8-1 of the ITAA 1997 because the expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.