Private ruling: Self-education expenses
Published: March 2013
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for self-education expenses? | A1: Yes

Relevant facts and circumstances: You are employed as a manager and were appointed to this position in the relevant calendar year. Your role includes the following duties: · Maintain good relations with your key stakeholders including customers and suppliers · Provide training and support to staff · Develop systems to support and compliment the business and staff. · Take ownership of various projects. · Use good time management skills to effect positive change. · Maintain staff levels and supply structured induction and support. · Through good practice, reduce business risk and debt levels. · Manage profit and loss budgets and work with accountants in regards to these as necessary · Motivate and manage staff within work environment, including regular assessments of personnel performance. You have had no formal training for this position. You intend to undertake a tertiary course over a 12 month period. The course consists of the following units: · Manage quality customer service · Develop a workplace learning environment · Facilitate continuous improvement · Manage projects · Manage personal work priorities and professional development · Recruit, select and induct staff · Manage risk · Manage budgets and financial plans · Use complex workplace communications strategies You will incur course fees. You are undertaking the course to improve your skills and knowledge in your current role as a manager in particular dealing with managing risk, projects, budgets and financial planning and customer service. You state that an improvement in your skills with managing financial plans is likely to lead to an increase in your current salary as it would take away the responsibility from the owner of the business. You will not receive any allowance or reimbursement for your expenses.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 and | Income Tax Assessment Act 1997 Section 82A.

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses or outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent that they are outgoings of a capital, private or domestic nature. Taxation Ruling TR 98/9 discusses the circumstances under which self-education expenses are allowable as a deduction. Self-education expenses are deductible where they have a relevant connection to the taxpayer's current income earning activities. 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; (1961) 8 AITR 406). Similarly, if the study of a subject of self-education objectively leads to, or is likely to lead to an increase in a taxpayer 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 ( FC of T v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161). In your case, it is accepted that the course you are considering to undertake will enhance the skills and knowledge that are required in the performance of your current employment duties as a manager. Consequently, the self-education expenses incurred in undertaking this course have the necessary and relevant connection with the earning of your assessable income.