Private ruling: Self-education expenses
Published: November 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

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

Relevant facts and circumstances: You are at university studying to be a teacher. You work part time as a Teacher's Aide.

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 circumstances in which self education expenses are allowable as a deduction under section 8-1 of the ITAA 1997. If a taxpayer's current income earning activities are based on the exercise of a skill or some specific knowledge and the self education enables the taxpayer to maintain or improve that skill or knowledge, the self education expenses are allowable as a deduction. The decision in FC of T v. Maddalena 71 ATC 4161; 2 ATR 541 supports the Commissioner's view that no deduction is allowable if the study is designed to enable a taxpayer to open up a new income earning activity, whether in business or in the taxpayer's current employment. This would include studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. You work as a teacher's aide while at university studying to be a teacher. Although you may gain some knowledge and skills from the subjects studied that could be of some assistance in your work, the predominant focus of the course is to provide the skills to become a fully qualified teacher. It is considered that there is an insufficient connection between the skills and knowledge required in your duties and the course that you have undertaken. The self education expenses associated with the course are not incurred in earning your assessable income. Consequently you are not entitled to a deduction for the expenses under section 8-1 of the ITAA 1997. | Detailed Reasoning - Note: The law has been changed so that, for the 2012 year and later years, you cannot claim a deduction for the study expenses you incur that relate only to your receipt of Austudy, ABSTUDY and Youth Allowance.

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