Private ruling: Self education expenses
Published: July 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 commenced part time employment. Your duties include manning the front desk on weekends and providing information to prospective customers. You are completing an instructors course. The course mainly involves teaching students. You have incurred expenses for course fees and other self education expenses. This course will improve the chance of you getting a job in the chosen industry. The fees are not payable using the Higher Education Loan Program. Your employer will not reimburse you for your expenses. You do not receive any Centrelink payments.

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 also 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. In your case, you work part time. From the job description provided for your position, it is clear that your role focuses on administrative tasks. Your course of study goes above and beyond what is required for your day to day duties as an employee. Although you may gain knowledge and skills from the course that could be of some assistance in your work, the predominant focus of the course is learning how to teach students. It is considered that there is an insufficient connection between the skills and knowledge required in your current duties and the course of study. Furthermore, it is considered that the study is designed to open up a new income earning activity. As there is an insufficient nexus between the course of self education and your current income earning activities, 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.

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.