Private ruling: Work related deductions
Date of advice: 21 September 2023
Published: 30 October 2023
Ruling period: Year ended 30 June 2023
Date scheme commenced: 1 July 2022

Ruling: Q1: Are you entitled to a self-education deduction for the educational course you are undertaking? | A1: No.

Relevant facts and circumstances: You are currently not employed. You were previously employed by Company A as part of a graduate program after finishing undergraduate studies in a related field. You were employed by Company A from DD MM 20XX to DD MM 20XX. After resigning from your position at Company A, you have commenced an educational course. You have chosen not to work while you concentrate on your study. This course will enable you to obtain work related to the course in the future.

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 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. Self-education expenses are deductible under section 8-1 of the ITAA 1997 where they have a relevant connection to the taxpayer's current income earning activities. Taxation Ruling TR 98/9 considers the deductibility of self-education expenses and states that if a taxpayer's income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction. As per paragraph 32 of TR 98/9, to be allowable under the first positive limb of section 8-1, expenditure must be able to be characterised as having been incurred in gaining or producing assessable income (Fletcher & Ors v. FC of T (1991) 173 CLR 1 at 17; 91 ATC 4950 at 4957; (1991) 22 ATR 613 at 621-622). In so far as it is relevant for present purposes, section 8-1 provides as follows: Subsection 8-1(1) You can deduct from your assessable income any loss or outgoing to the extent that: (a) it is incurred in gaining or producing your assessable income ... '. | Detailed Reasoning - Application to your circumstances: • You are currently not employed. • You have chosen to concentrate on your study. • You are studying a course in the hope of obtaining related employment. As you are not working this course does not have any connection to employment activity. The Commissioner acknowledges that you may be able to use the course in future employment, however the connection must be established with a current income earning activity. Therefore, you are not entitled to a self-education education for the costs associated with the course.