Private ruling: Self education
Published: August 2011
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

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



Reasons for decision: Summary: Self education expenses generally fall for consideration under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). This section allows a deduction for losses and outgoings which are incurred in the course of gaining or producing assessable income, unless the losses or outgoings are of a capital, private or domestic nature. Taxation Ruling TR 98/9 provides the Commissioner's view on the deductibility of self education expenses. It states that self education expenses are incurred in gaining or producing assessable income if they are directly relevant to the person's employment activities or are likely to lead to an increase in income from those activities. A deduction for self education expenses will not be allowable if the study is to enable the taxpayer to gain employment or open up a new income earning activity ( Federal Commissioner of Taxation v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161). This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. This is because the expenses are seen to be incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. In your case, you have been offered a position as a registered professional once you obtain the necessary qualification. The course you are undertaking is to enable you to obtain a qualification to allow you to work as a registered professional. That is, to open up a new income earning activity. Therefore, you are not entitled to a deduction under section 8-1 of the ITAA 1997.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | Relevant facts: You worked in a managerial role prior to coming to Australia. | You have been offered a job as a registered professional. | You are undertaking a course to enable you to qualify as a registered professional. | Relevant legislative provision: Income Tax Assessment Act 1997 Section 8-1