Private ruling: Self-education expenses
Published: August 2013
Ruling period: Year ending 30 June 2010 | Year ending 30 June 2011 | Year ending 30 June 2012 | Year ending 30 June 2013
Date scheme commenced: 1 July 2009

Ruling: Q1: Are the expenses you incurred in undertaking your degree, which includes unpaid placements, an allowable deduction? | A1: No.

Relevant facts and circumstances: You are employed on a part time / casual basis at retail store while you complete your tertiary education course (the course). During the course you are required to undertake unpaid work at locations. You are otherwise not employed in the field of your studies. You have incurred expenses while undertaking the course and the placement, including university fees, books, uniforms, and travel between university and work.

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 allows a deduction for all losses or outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent that they are outgoings of a capital, private or domestic nature. Taxation Ruling TR 98/9 discusses the circumstances under which self-education expenses are allowable as a deduction. Self-education expenses are deductible where they have a relevant connection to the taxpayer's current income earning activities. However, no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to open up a new income earning activity, whether in business or in the taxpayers 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 ( FC of T v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161). Whilst we acknowledge that your casual / part time employment assists in enabling you to afford to complete your studies, there is no connection between your employment and the course. The course of study is designed to enable you to open up a new income earning activity in the field of your studies. Therefore you are unable to claim a deduction for the expenses incurred relating to the course as they are considered to be incurred at a point too soon. Further, although your placement is a requirement of your course, it is unpaid work. As such, the expenses in relation to the placement were not incurred in the course of gaining or producing assessable income, and are therefore not deducible.