Private ruling: Self-education expenses
Date of advice: 7 November 2022
Published: 16 January 2023
Ruling period: Year ended 30 June 20xx
Date scheme commenced: 30 June 20xx

Ruling: Q1: Can you claim a deduction for self-education expenses incurred in studying a Bachelor of Science (Nursing) under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No.

Relevant facts and circumstances: You have worked as an Assistant in Nursing for approximately three years. Responsibilities and duties of this position include all manner of work to assist nurses to provide required care to patients. Two years ago you enrolled in a Bachelor of Science (Nursing) through a registered tertiary education provider to enable you to become a nurse. You are a full fee paying student covering all course costs yourself.

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. | Detailed Reasoning - Self-education expenses: The Commissioner's view on the deductibility of self-education expenses is contained in Taxation Ruling TR 98/9. These guidelines have been established through the views taken by the Courts, Boards of Review and Administrative Appeals Tribunals. In accordance with paragraphs 13 and 14 of TR 98/9, expenses of self-education will satisfy the requirements of section 8-1 of the ITAA 1997 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; 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. Therefore, provided there is sufficient connection between your course of self-education and your current income earning activities, you are entitled to claim a deduction for your self-education expenses. However, as stated in paragraph 15 of TR 98/9, self-education expenses will not be deductible if the study is intended to: • enable you to get employment; • enable you to obtain new employment; or • to open up a new income-earning activity (whether in business or in your current employment). This includes studies relating to a particular profession, occupation or field of employment in which a taxpayer is not yet engaged. The expense is considered to be incurred at a point too soon to be regarded as incurred in gaining or producing assessable income ( FC of T v. Maddalena 71 ATC 4161; 2 ATR 541). In your case you are studying a course of education whilst employed as a support worker. The course you are undertaking is designed to provide you with new skills for a change in your career, that is, to open up a new income earning activity in the capacity of a professional. Regardless of whether you remain with the same employer you will nevertheless be entering a new field of employment. In the case of Assefa v FC of T [2009] AATA 2 ( Assefa's case ), it was considered whether studying a course of education in order to advance to a higher classification of nursing was opening up a new income earning capacity. The taxpayer in this case was employed as an assistant in nursing and a care service employee while studying a Bachelor of Nursing degree. The Administrative Appeals Tribunal held in Assefa's case that no deduction was allowable for the self-education expenses. It was determined that there was a significant difference between the position of enrolled nurse and registered nurse on one hand, and personal care assistant/nursing assistant on the other. The taxpayer was not considered to be incurring the expenditure in gaining or producing her assessable income, but was studying towards their initial qualification as a registered nurse. Your case can be compared to Assefa's case in that although the knowledge gained from the course of education may be of assistance to you in your current occupation; this is merely incidental to the main purpose for undertaking the course, which is becoming a fully qualified professional. Where a course of study is undertaken to attain and utilise skills or qualifications to open up another source of income earning potential from the qualification, a deduction is not allowable. The purpose of the self-education expenses is considered to be incurred to earn income at some future point in time when the qualification has been obtained. You are not entitled to the self-education expenses associated with the course against your income as a support worker because the expenses were incurred at a point too soon to be regarded as incurred in gaining or producing income from your future employment as a professional. Nor are the expenses considered to be directly relevant and incidental to your current income earning activities as a support worker. The subjects studied will provide you with skills and abilities above those you require in your current employment. Therefore, we consider that the study does not have the required connection to your current income earning activities. The knowledge, skills and abilities you will gain from your study will assist you in gaining new employment as a qualified professional. Your expenses were incurred at a point to soon to be regarded as being incurred in the gaining or producing of your assessable income as a nursing aide and are therefore not an allowable deduction.