Private ruling: Self-education expenses and membership fees
Date of advice: 17 August 2015
Published: August 2015
Ruling period: Year ended 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2014

Ruling: Questions and answers | 1. Are you entitled to a deduction for work related self-education expenses? | Yes. | 2. Are you entitled to a deduction for the membership fees you pay to a professional association? | Yes.

Relevant facts and circumstances: You completed a university degree and obtained employment with an entity as part of its university graduate intake. You are a member of a professional association which is related to your field of study and have to pay an annual membership fee. You did not have to pay a 'one off' membership fee in addition to the initial annual membership fee. You are undertaking a study program which is offered by the professional association. You are charged a course fee for each subject you undertake as part of the program. You have been granted study leave by your employer to assist you in undertaking the study program.

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

Reasons for decision: 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. For self-education expenses to be deductible they must have a relevant connection to the taxpayer's current income earning activities. The Commissioner's view on the deductibility of self-education expenses is contained in Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business (TR 98/9). In accordance with TR 98/9, self-education expenses are deductible if: • a taxpayers 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, and • the study of a subject of self-education objectively leads to, or is likely to lead to, an increase in a taxpayers income from his or her current income-earning activities in the future. However, the fact that the study will enable a taxpayer to get employment, to obtain new employment or to open up a new income earning activity is not a sufficient basis in itself for self-education expenses to be deductible. In your case, you completed a university degree and obtained employment with an entity as part of its university graduate intake. You are now undertaking a course of study related to your degree which is offered by the professional association. Consequently, it is considered that your employment is based on the exercise of the skills and specific knowledge acquired in completing your degree. Further, your course of study will enable you to maintain or improve that skill and knowledge and will also have the potential to lead to an increase in your employment income in the future. Therefore, you are entitled to a deduction for the course fees involved with the study program. | Detailed Reasoning - Membership fees: Taxation Ruling TR 2000/7 Taxation ruling Income tax: subscriptions, joining fees, levies and contributions paid to associations by individuals states that periodic subscriptions paid by a person for membership of a professional association are deductible under section 8-1 of the ITAA 1997 where the principal activities of the association are relevant to the gaining or producing of assessable income by the member. Accordingly, where the principal activities of the association include the provision of professional development services, the subscription is an allowable deduction, provided that the member is earning assessable income from the relevant profession. In your case, as previously mentioned, you gained employment through the completion of a university degree. You subsequently became a member of a professional association which provides professional development services to its members, as evidenced by your participation in the study program. Therefore, it is considered that your membership of the professional association has sufficient nexus to your income earning activities and therefore, the annual membership fees you pay are deductible.