Private ruling: Self education expenses
Published: October 2012
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 1 July 2010

Ruling: Question and answer: | Are you entitled to a full deduction for self education expenses? | No.


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 Income tax: deductibility of self-education expenses incurred by an employee or a person in business, provides the Commissioner's view for the circumstances under which self-education expenses are allowable as a deduction. Tax Ruling TR 98/9 provides that a deduction is allowable for self-education expenses if a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of the self-education enables the taxpayer to maintain or improve that skill or knowledge ( Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348. Similarly, if the study of a subject of self-education objectively leads to, or is likely to lead to an increase in a taxpayer's income from his or her current income earning activities in the future, a deduction is allowable. 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 (see Federal Commissioner of Taxation v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161; TR 98/9). In your case you enrolled in a self education course at a recognised learning institution. At the time that you enrolled in and paid for the course you were unemployed, therefore the expenditure has not been incurred in the course of gaining or producing your assessable income but rather incurred to open up a new income-earning activity. Therefore your expenses have been incurred at a point too soon to be regarded as being incurred in gaining or producing your assessable income. While it is acknowledged that for a period you were studying while being employed fulltime, this does not alter the fact that at the time that you enrolled in the course and incurred the expense you were unemployed and therefore the expense was not incurred in gaining or producing your assessable income. Accordingly, you are not entitled to a deduction for expenses incurred in enrolling in self education course, 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. | You undertook the course to enhance your knowledge in a specific field of employment and to further your knowledge. | At the time that you enrolled in the course you were unemployed. | Undertaking the course provided you with the qualifications to work in a specific field of employment competently. | Shortly after undertaking the course you gained a full-time employment position relevant to the course you were undertaking, however undertaking the course was not a prerequisite for gaining your employment position. | You were provided with a number of hours per week to study during work hours with the remainder of your study being completed during your own time. | You incurred course fees for which you have not been reimbursed. | You have documentation to support the expense incurred.