Private ruling: Self-education expenses
Published: June 2013
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 1 July 2012

Ruling: Q2: Does section 82A of the Income Tax Assessment Act 1936 apply? Answer: Not applicable as the expenses are not deductible


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 or a provision of the taxation legislation excludes it. Taxation Ruling TR 98/9 deals with the deductibility of self-education expenses. Self-education expenses are deductible under section 8-1 of the ITAA 1997 where they have a relevant connection to the taxpayer's current income earning activities. 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, the self-education expenses are allowable as a deduction. If a course of study is too general in terms of the taxpayer's current income earning activities, the necessary connection between the self-education expense and the income earning activity does not exist. 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, the self-education expenses are allowable as a deduction. No deduction is allowable for self-education expenses if the study is to enable a taxpayer to get employment, to obtain new employment or open up a new income earning activity (whether in business or in the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. You have incurred expenses in relation to a course of study. For these expenses to be allowable they must have a connection with your income earning activities. The qualifications you hope to obtain are not necessary in your current job and it is considered that you have obtained completely new skills by undertaking the course. Furthermore you intend on seeking out new employment. As such, you are not entitled to a deduction for the cost of obtaining either education course under section 8-1 of the ITAA 1997 as there is sufficient nexus to your current income earning activity. As you are not entitled to a deduction under section 8-1 of the ITAA 1997, section 82A of the ITAA 1936 does not apply.

Question 1: Are you entitled to a deduction for self-education expenses? | Relevant facts: You are employed part time. | You have completed a course. | You have commenced further study. | It is your intention to seek new employment as a result of undertaking both courses.