Date of advice: 26 May 2026
Published: 3 August 2026
Ruling period: Income year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

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

Relevant facts and circumstances: Timeline of your employment and studies On DD MM 20YY, you commenced full time employment at employer A, a firm of accountants and advisors as an external auditor. Under this job you provided external audits of financial statements to your clients. Your job title was Graduate Auditor. Your job description included: • Assist with all phases of the audit engagement from planning and field work to completion. • Liaise directly with a broad range of clients. • Evaluate and document the internal controls of clients. • Review and prepare financial statements and key documentation. • Prepare audit reports. • Actively contribute to development initiatives within the division. On DD MM 20YY, you were promoted to Intermediate Auditor. On DD MM 20YY, you passed probation and allowed to utilise the benefits provided towards the chartered accounting study course, (CA). This course is for accountants and is a X-year course offered by a tertiary institution (the institution). The cost of your study was paid for by employer A, on the condition that you would stay employed with them for X months after completion of each subject or repay them under a clawback agreement. The institution was where your studies were was undertaken. The institution is part of a global network of business and finance leaders. The institution is registered by the Tertiary Education Quality and Standards Agency (TEQSA). You missed the enrolment date for 20XX - Term X. Therefore, you enrolled for 20XX - Term X. DD MM 20YY, Term X, you commenced your first your CA studies. You were a part-time student. Employer A paid for tuition fees and provided X days of paid study leave for each subject undertaken. On DD MM 20YY, you handed in your resignation to employer A. On DD MM 20YY, your employment with employer A was terminated. At that time, employer A deducted a total of $X from your final pay pursuant to the clawback agreement. This amount consisted of the tuition fees for the following subjects:

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1

Reasons for decision: Detailed Reasoning - Subject: Deductibility of self-education expenses | Detailed Reasoning - Question: Are you entitled to claim a deduction for self-education expenses? | Summary: You are entitled to claim a deduction for self-education expenses for the amounts recovered by RSM from your final pay which related to CA course fees paid by them on your behalf as they have the necessary connection to your income earning activity at the time and you have the required evidence to substantiate your claim. | Detailed Reasoning - Detailed reasoning: Section 8-1 of the 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. The words "incurred in gaining or producing the assessable income" mean in the course of gaining or producing such income. The deductibility of self-education expenses falls for consideration under section 8-1 of the ITAA 1997. Therefore, in considering whether you are entitled to a deduction, it is necessary to consider whether the expenses were incurred in the course of gaining or producing your assessable income. Taxation Ruling 2024/3 Income tax: deductibility of self-education expenses incurred by an individual (TR 2024/3) 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 get employment, to obtain new employment or 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 (see Federal Commissioner of Taxation v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161; and paragraph 22 of TR 2024/3). | Detailed Reasoning - Application to your circumstances: In your case you were employed by employer B as a Senior Auditor. You accepted this job because, although similar to the job you had had with employer A, it included a promotion from Intermediate Auditor to Senior Auditor and an increase in salary from $X per annum to $X per annum. Also, nine and a half months after commencing employment with employer B, you were promoted to Assistant Manager. The CA course directly related to your income earning activity at the time you were undertaking it. You undertook the CA course while employed as an auditor as it was directly relevant to your duties. The program provided technical knowledge in accounting, auditing, taxation, managing staff and other subjects, which were integral to your role. Completion of the CA qualification was supported and expected by your employer and is widely regarded as a standard requirement within the accounting profession. It also contributed to career progression and increased earning capacity, as evidenced by your employment history. While in your employment, you completed an CA course. Employer B incurred costs for course fees in relation to undertaking the studies. They also re-imbursed you for course fees you were required to replay to your previous employer, employer A, under a clawback agreement, in relation to the same CA course. You were required to remain in employer B's employment for X months after completing the CA course or you would be required to repay them for these expenses, under a similar clawback agreement to the one you had had with employer A. You have demonstrated that the CA course would deepen your understanding and capability in performing your role at employer B. It is considered that the study would maintain or improve your skills and knowledge used in your income earning activity by enhancing your skills in (but not limited to) risk and technology, audit and risk, strategy and business performance, tax, data analytics and insights and integrated chartered accounting practice. This is supported by the pay increase you received upon commencing your employment with employer B and then your promotion by them to Assistant Manager. Your self-education expenses are considered to have had the relevant connection to your income earning activities at the time you incurred the obligation to repay employer B under the clawback agreement you had had with them. Because you undertook the CA course in order to assist your then current job and in obtaining a promotion, it was incurred in the course of gaining or producing your assessable income. It is not considered that you were opening up a new income-earning activity. In addition, you have the necessary receipts to substantiate your claims. Therefore, the net expenses incurred by you in relation to your CA course are considered allowable as a deduction under section 8-1 of the ITAA 1997 for the income year in which they were incurred.

Sustainability for Accountants | On DD MM 20YY, you commenced full time employment at employer B as a Senior auditor. At employer B, you were still an external auditor. Your study in CA had allowed you to obtain a higher position at employer B as a Senior Auditor. At that time, you were still completing the CA course and had not graduated. | Your job at employer B involved: | • Identify and address technical accounting and audit issues. | • Reviews of financial statements to ensure compliance with Accounting Standards and preparation of reports and opinions to management. | • Perform reviews of audit work. | • Summarise the key areas of the engagement for the partner. | • Conduct various audit engagements simultaneously with numerous engagement team members per audit. | • Assist with management and co-ordination of the audit team including training, mentoring and methodology compliance. | • Monitor staffing requirements and future resource planning issues. | Employer B paid for the tuition fees. You received X days of paid study leave. | Employer B also paid tuition fees for a CA Study Masterclass (CASM) course you undertook. | In MM 20YY, employer B agreed to reimburse you for the amount of $X you repaid to employer A. This was in addition to employer B paying the remainder of your CA study course fees with a similar clawback agreement that you remained employed with employer B for X months after the completion of the CA course. | On DD MM 20YY, the results of your final subject in the CA course were published. | On DD MM 20YY, you handed in your resignation to employer B. | On DD MM 20YY you received a Statement of Academic Record recording your successful completion of all the required CA subjects. | On DD MM 20YY, you received a letter from employer B headed Confirmation of Cessation from employer B. This letter included: | • An acknowledgment and acceptance of your notice of resignation from employer B dated DD MM 20YY. | • A statement that your date of cessation would be DD MM 20YY. | • A statement that in the event you owe the employer B any CA course costs, this amount will be set off against and deducted from your final payment. | • An invoice dated DD MM 20YY with this schedule Professional Costs, Charges & Disbursements, detailing amount to be recovered from your final pay totalling $X: | A schedule of your final payment as at DD MM 20YY: | Total Pay Due (Before Tax) | Total Net Pay (After Tax) | CA/Training cost to be recouped | Money recouped from final wages | Net Pay (after recoupment) | On DD MM 20YY, you signed the Declaration of Acceptance attached to the Confirmation of Cessation from employer B. | You paid the balance due of $X through a bank transfer in MM 20YY. | You did not incur any study cost until the 20YY-YY income year because all of your tuition fees were initially paid for by your employers, employer A and employer B. You have not previously claimed a tax deduction as you did not incur any out-of-pocket expenses because they were fully paid or reimbursed by your employers. You incurred all your out-of-pocket expenses upon resignation from employer B. | In MM/MM 20YY, you commenced employment with employer C as a Management Account. This role required that you were a fully qualified accountant. You become one through your CA study. | Reasons for undertaking your studies: Your reasons for undertaking the CA course were that employer A's policy was that in order to receive a promotion to a Senior Auditor, you must had obtained your CA qualification (or CPA). This accreditation was required if you wanted to be an accountant at a public practice. It opened up your career progression and choices. All professional staff had to take the course or there was no room for promotion. There was an unwritten rule that professional employees who have not completed all CA subjects were not eligible for promotion beyond Intermediate Auditor, this was evidential and were told at our performance review meetings with management. It's graduate program also mentions about Chartered Accountant course and the support it provides. | This role, and any similar roles in the industry, required an accreditation if you wanted to progress in terms of position salary and responsibility. William Buck provided a pay rise of around $X to $X for each subject you completed. | Without the qualification, it is extremely difficult to earn an income higher than $X per annum, or to find a job as a senior accountant, senior auditor, senior analyst, etc. Your salary increases since MM 20YY proves this point. Your salary increases were partly due to years of experience, but also strongly related to your progression in having more completed subjects of the CA course of studies. This is reflected in your salary: | • Your job from employer A offered $X per annum. | • Your job from employer B offered $X per annum. | • Your job from employer C (post to completing the CA course) offered $X per annum, excluding super. | The course directly related to your employment at the time you were undertaking the course. You undertook the CA program while employed as an external auditor as it was directly relevant to your duties. The program provided technical knowledge in financial reporting, auditing, and taxation, which were integral to your role. Completion of the CA qualification was supported and expected by your employer and is widely regarded as a standard requirement within the accounting profession. It also contributed to career progression and increased earning capacity, as evidenced by your employment history. | Employer B required that all managers and above to be CA qualified or equivalent. All professional staff must be at least working towards a CA qualification or equivalent. Without completing the CA, progression in your career would be very unlikely as a CA being essential to receiving promotion. | At both employer A and employer B, you were required to answer the question when applying for the job 'Are you currently, or are you willing to be, enrolled in CA course'. You answered yes. | In addition to the above, you undertook one CASM course. This is a course offered by CA ANZ. It is designed to help strengthen knowledge, navigate complex topics with ease, and prepare for assessments with confidence. The CASM Tuition Fee was $X. The start date of this course was DD MM 20YY and the end date was DD MM 20YY. | You have documentary evidence to substantiate your claim, including invoices, the Confirmation of Cessation from employer B and your final payslip from employer B.