Private ruling: Self-education expenses
Date of advice: 9 April 2020
Published: June 2020
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to claim a deduction for expenses incurred for your study? | A1: Yes.

Relevant facts and circumstances: You commenced your role in Month X 20XX. Your duties include the following: - Designing, standardising, managing and reviewing current processes and practices to establish continuous improvement programs and optimise billing, collection and sales processes and cost minimisation. - Performing audits and functional investigations to establish standards within the sales and operations departments while maintaining QA/QC processes in line. - Conducting, analysing and reporting on business analytics, market research and benchmarking to ensure optimum performance and competitive advantage is maintained. - Analysing workforce utilisation and forecast business needs for developing medium- and long-term business growth, and determining workforce optimisation strategies. - Designing, organising and overseeing the utilisation of the company's CRM. - Reviewing, designing and coordinating programs and financial resources. - Liaising with clients, suppliers, freelance sellers and stakeholders to develop new partnerships and follow on contractual responsibilities and requirements. - Designing, organising and overseeing the construction of the company website's front-end and back-end, including roll out of new web tools to optimize operations and resource efficiency. You are enrolled in a course at university. You advised that the program has been crucial for your career and professional and you are able to deliver more value and a holistic approach to processes optimisation and liaison with different stakeholders. Your course has also been recognised as a continuous professional development.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1. | Income Tax Assessment Act 1936 section 82.

Reasons for decision: Summary: The tuition fees you will incur to complete your course are deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). | Detailed Reasoning - Self-education expenses: 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 Income tax: deductibility of self-education expenses incurred by an employee or a person in business 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. In addition, 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, the self-education expenses are allowable as a deduction. 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 taxpayer's 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. | Detailed Reasoning - Prepaid expenses: Section 82KZM of the Income Tax Assessment Act 1936 (ITAA 1936) contains the rules which affect the timing of deductions for certain prepaid expenses. The effect of section 82KZM of the ITAA 1936 is to evenly spread the deduction for prepaid expenses over the years comprising the eligible service period. If an individual incurs relevant expenditure not in carrying a business and the eligible service period is: · Longer than 12 months · Is shorter than 12 months but ends after the last day of the year of income after the one in which the expenditure was incurred, then the deduction can be apportioned over the years of the eligible service period. | Detailed Reasoning - Application to your circumstances: In your case it is accepted that the study has sufficient nexus to your income earning activities. It is further accepted that it will improve your skill and knowledge on dealing with process optimisation and management in your role. Therefore, the expenses incurred for tuition fees paid are an allowable deduction under section 8-1 of the ITAA 1997. You may need to apportion some of the expense over the years under the prepayment rules as the eligible service period is longer than 12 months and ends after the last day of the income year after the one in which the expenditure was incurred. | Detailed Reasoning - Limitation on deductibility of expenses: Section 82A of the ITAA 1936operates to limit the amount of self-education expenses otherwise allowable under section 8-1 of the ITAA 1997. Only the excess of the self-education expenses over $250 may be considered for deduction under section 8-1.