Private ruling: Self-education expenses
Date of advice: 10 November 2017
Published: April 2018
Ruling period: Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020
Date scheme commenced: DDMMYY

Ruling: Q1: Are the course fees paid in connection with a self-education course at an Australian tertiary education provider an allowable deduction? | A1: Yes

Relevant facts and circumstances: You are employed by an Australian firm and your position description statement outlines your duties. You are enrolled in a self-education course (‘the course’) at an Australian tertiary education provider which commences in late 20xx. The course will take a minimum of two years to complete, and you are hoping to complete it within this timeframe, however it may take slightly longer depending on other work commitments. You are undertaking the course to enhance your knowledge and success in your current role. Your employer is encouraging you to undertake the course and is giving you their full support. You believe that the course is directly related to your current role as it is tailored to working professionals in the same business industry, and all of the course units are applicable and related to your everyday tasks and will assist you to grow and become successful in the position. The course structure aligns with the duties in your current position. You will maintain employment with your current employer for the duration of the course. You will not be required to take leave from your employment as the course is 100% on line. Your employer is not paying for any part of the course.

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 discusses the circumstances under which self-education expenses are allowable as a deduction. 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). However, paragraph 15 of TR 98/9 states that no deduction is allowable for self-education expenses if the study is to enable the taxpayer to get employment, obtain new employment or to open up a new income-earning activity (whether in business or the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field or employment in which the taxpayer is not yet engaged. All of those expenses would be incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. Further, paragraph 26 of TR 98/9 states that expenses relating to self-education which are compulsory and unavoidable, as well as those for which a need can be shown in terms of fulfilling the requirements of the course, are regarded as being 'necessarily incurred' and are expenses of self-education. In this case, the duties for your current role and the course structure align significantly. The course maintains and improves skills and specific knowledge that you exercise in your current income earning capacity. Potential career paths for graduates include positions which are very similar to your current position. It is considered that the study will maintain or improve your skill or knowledge used in your current income earning activity. Consequently you are entitled to a deduction for the course fees incurred.