Private ruling: Self-education expenses
Date of advice: 20 August 2019
Published: October 2019
Ruling period: Year ended 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Are the self-education expenses outlined below an allowable deduction - in whole or in part - under s8-1 of the Income Tax Assessment Act 1997 ? | A1: No

Relevant facts and circumstances: You have been employed in a Level A role for a number of years. In this role you were required to undertake a number of duties which included: · Supporting and assisting with research for number of different activities. · Supporting and assisting with a number of different activities including supervision, moderation and administration. · Supporting and assisting with a number of programs and activities. In order to move from a Level A employee to a Level B employee requires you to obtain a doctoral or masters qualification or equivalent accreditation and standing. The Level B role requires employees to undertake a number of duties additional to the typical duties for Level A staff. You completed a full-time Master's level degree while employed as lecturer Level A employee. You paid the course fees via FEE-HELP. You undertook the qualification with the purposes of: · Maintaining and improving your skills and knowledge for your current work activities. · Gaining a promotion from a Level A employee to a Level B employee. · Meeting the criteria required to qualify to undertake a PhD.

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 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 Income tax: deductibility of self-education expenses incurred by an employee or a person in business 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). In your case, although you may gain or improve your knowledge and skills by undertaking the course that could be of some assistance in your Level A role, it was not a requirement to undertake your duties in that role. It is considered that you undertook the study in order to open up a new income earning activity as a Level B employee as you were unable to become a Level B employee without a Master's level degree.