Private ruling: Self-education expenses
Date of advice: 22 February 2018
Published: June 2018
Ruling period: Year ending 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2017

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

Relevant facts and circumstances: You are currently employed. Your job has detailed procedures that you are required to follow to fulfil your duties. You have enrolled in a course which will commence mid 20XX. You are hoping that by completing the course it will assist you in opening up new opportunities with your current employer, allowing you to move to another city. You will be paying for the course yourself. 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) 106 CLR 60, (1961) 12 ATD 348). 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 his or her current income earning activities in the future, a deduction is allowable. 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). Studies undertaken in order to obtain employment in a new field are considered to have been incurred at a point too soon to be regarded as incurred in gaining or producing assessable income and such expenses are not deductible. In your case, you will be completing the course with the main aim of gaining new opportunities with your current employer in order to move cities and to assist you in your current role. However, given that your current role relies heavily on procedures to tell you how to fulfil your duties there is an insufficient nexus between your current duties and the course for a deduction to be allowable. In addition, another focus of the course is to gain the skills needed to attain new opportunities with your current employer. It could be seen as attempting to gain employment in a new field. Therefore, you are not entitled to a deduction for self-education expenses for this course.