Private ruling: self education expenses
Published: September 2011
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

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

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a chef/cook. You are studying an advanced diploma of naturopathy. The naturopathy course involves the study of nutrition as well as other health subjects which you submit are relevant to your ability to earn income as a chef/cook.

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 a loss or outgoing incurred in gaining or producing assessable income or necessarily incurred in carrying on a business for the purposes of gaining or producing assessable income. However, no deduction is allowed for losses or outgoings to the extent to which they are of a capital, private or domestic nature or are incurred in gaining or producing exempt income, or are otherwise prevented from being deductible by a specific provision of ITAA 1997. For any deduction to be allowable under section 8-1 of the ITAA 1997 you must be able to demonstrate that there is a real and direct connection between the outgoing and the gaining of your assessable income, so that the outgoing is incidental and relevant to the actual activities that gain assessable income. | Detailed Reasoning - Self-education: The Commissioners view on the deductibility of self-education expenses is contained in Taxation Ruling TR 98/9. In accordance with TR 98/9, expenses of self-education will satisfy the requirements of section 8-1 of the ITAA 1997 if: · your income-earning activities are based on the exercise of a skill or some specific knowledge, and the subject of self-education enables you to maintain or improve that skill or knowledge; or · the study of a subject of self-education objectively leads to, or is likely to lead to, an increase in a taxpayers income from their current income-earning activities in the future. If neither of the above tests is satisfied, expenses of self-education will not be deductible if the study is to enable you to: · get employment, · to obtain new employment, or · to open up a new income earning activity. Paragraph 42 of TR 98/9 states that if a course of study is too general in terms of the taxpayer's current income earning activities, the necessary connection between the self education expense and the income earning activity does not exist. Factors used to determine the connection between a particular outgoing and the way a taxpayer more directly produces their assessable income include whether the outgoing is incidental and relevant to the gaining of their assessable income, whether the outgoing has the essential character of business expenditure and whether the outgoing is an express or implied condition of their employment. In general, where a person undertakes a course of self education, a deduction will be allowable where that person is already qualified or skilled in a particular profession and the purpose of the education is to maintain or improve that professional knowledge and skill. Expenses intended to enable the taxpayer to practise in another area will not be allowable deductions. Your income earning activity is that of a chef/cook. Although the knowledge gained in areas studied such as nutrition may assist you in your current employment duties to some extent an advanced diploma in naturopathy qualification is not a necessary explicit or implicit requirement of your profession. There is insufficient connection between the skills and knowledge you require to perform your work as a chef/cook and the skills and knowledge you will gain through undertaking the course in naturopathy. Therefore you are not entitled to a deduction for your self education expenses in obtaining this qualification.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.