Private ruling: Self-education expenses
Date of advice: 21 March 2019
Published: May 2019
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Are you entitled to claim a deduction for expenses incurred in attending the yoga teacher training course as self-education expenses? | A1: No. | Q2: Are you entitled to claim a deduction for expenses incurred in attending yoga retreats as self-education expenses? | A2: No.

Relevant facts and circumstances: You completed a yoga teacher training course in Country X. This course covered energy alignment, anatomy, Indian spirituality, yoga philosophy, teachings on class structure and teaching techniques. You paid for this course voluntarily and out of private funds. While you were in Country X, you worked remotely with a client, made some changes to your business and attended networking functions. You fuse your professional practice with consulting to provide commercial and professional advisory in the digital economy. You are an accredited yoga teacher but have not yet taught paid yoga classes. You use yoga philosophy in your consulting work with clients. You also attended a yoga retreat in two other countries. These retreats involved practising yoga, meditation, participating in mindfulness and coaching activities, learning about aspects of Ayurvedic treatments, understanding yoga teaching philosophy and professional and personal development. You are a qualified professional and you provide commercial and professional advisory and consulting services to organisations. This role involves managing change, providing solutions to corporate problems, teaching wellness and lifestyle and focusing on innovation, technology and communications.

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 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, or relate to the earning of exempt income. Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses 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. Paragraph 34 of TR 98/9 states that it is necessary to determine the connection between the particular outgoing and the operations by which the taxpayer more directly gains or produces his or her assessable income ( Charles Moore & Co (WA) Pty Ltd v. FC of T (1956) 95 CLR 344 at 349-350; (1956) 11 ATD 147 at 148; (1956) 6 AITR 379 at 384; FC of T v. Cooper 91 ATC 4396 at 4403; (1991) 21 ATR 1616 at 1624; Roads and Traffic Authority of NSW v. FC of T 93 ATC 4508 at 4521; (1993) 26 ATR 76 at 91). Whether such a connection exists is a question of fact to be determined by reference to all the facts of the particular case. 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; (1961) 8 AITR 406). 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 taxpayer's 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). In your case, your assessable income is derived from the provision of commercial and professional advisory and consulting services to organisations. This involves managing change, providing solutions to corporate problems, teaching wellness and lifestyle and focusing on innovation, technology and communications. The yoga teacher training course completed in Country X covered areas such as energy alignment, anatomy, Indian spirituality, yoga philosophy, teachings on class structure and teaching techniques. The yoga teacher training course has been designed for participants to teach yoga. While you incorporate yoga philosophy into your consulting role, your income is not derived from teaching yoga. Although the course may have a general effect of assisting you to become a better consultant, a sufficient connection does not exist between the course and the services you provide. You are not entitled to claim a deduction for the expenses incurred in attending the yoga teacher training course. The retreats you attended involved practising yoga, meditation, participating in mindfulness and coaching activities, learning about aspects of Ayurvedic treatments, understanding yoga teaching philosophy and professional and personal development. Similar to the yoga teacher training course, the retreats do not have a sufficient connection with your consulting duties. Even though the retreat involved understanding yoga teaching philosophy, participating in mindfulness and coaching activities and professional development activities which generally assist you in your work with clients, these activities do not have a sufficient connection with your consulting role because the emphasis is on yoga philosophy. The activities and teachings in the retreats did not directly involve the fusion of yoga philosophies with consulting work such as managing change and solving corporate problems. The retreats also involved practicing yoga, meditation, learning about Ayurvedic treatment for a medical condition and personal development and training. These components of the retreats were closely involved with your individual development which also points towards the retreats being of a private nature. You are not entitled to claim the expenses incurred in attending the yoga retreats.