Private ruling: Self-education expenses
Date of advice: 3 November 2015
Published: November 2015
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to claim a deduction for self-education expenses? | A1: No.

Relevant facts and circumstances: You arrived in Australia on a student visa. You are an Australian resident for tax purposes. Your visa requirements require you to study to remain in Australia. You were not working in the aged care industry prior to residing in Australia. You commenced employment with Company A in 20XX. You are employed as a care service employee on a casual basis, averaging 20 hours per week. You were enrolled in a lower level certificate prior to employment, since working at Company A you have changed to a Certificate IV in the same field through the College X Your subjects within the Certificate IV enable you to gain a technical understanding for your current work duties. Your course commenced in 20XX and was completed in 20YY. You paid for your course in instalments. Upon completion of your course it will lead to an improvement in knowledge and procedures regularly exercised within your duties; your work duties will not change. Your employer, Company A does not require you to complete the Certificate IV in order for you to undertake your duties.

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

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act (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) 106 CLR 60, (1961) 12 ATD 348). 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; and paragraphs 15, & 48 62 of TR 98/9). The general principle is that taxpayer's who undertake studies whilst on a student visa is doing so in order to meet the requirements of their visa and any assessable income derived from casual work is incidental to the studies and is primarily to support the taxpayer whilst the studies are being completed. ( Tobias v. Federal Commissioner of Taxation (1998) 38 ATR 1169; Vivekanand Amuthalan v. Commissioner of Taxation (2008) AATA 818) In your case, your course of education has been undertaken in order to satisfy the requirements of your student visa. Therefore, the expenses incurred in undertaking the Certificate IV are considered private in nature. While your course of study has some connection with your current employment, on completion of your studies your continued ability to work in your chosen field with your current employer, or with a new employer, in the future is not reliant on your skill or knowledge but rather on your ability to obtain a resident visa. Therefore, your expenditure for your tuition fees has been incurred at a point too soon and is not deductible under section 8-1 of the ITAA 1997.