Private ruling: Self education
Published: October 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for self education? | A1: No. | Q2: Are you entitled to a deduction for costs relating attending your graduation? | A2: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Detailed Reasoning - Degree: 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 circumstances in which self education expenses are allowable as a deduction under section 8-1 of the ITAA 1997. If a taxpayer's current income earning activities are based on the exercise of a skill or some specific knowledge and the self education enables the taxpayer to maintain or improve that skill or knowledge, the self education expenses are allowable as a deduction. Costs of self education are not deductible if the study is to enable a taxpayer to get employment, to obtain new employment or to 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. In such situations the expenses 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]. Although you may gain knowledge and skills from the course that could be of some assistance in your work it is clear when reviewing your Key Result/Performance Area that your role focuses on sales, reservations and maintaining records and staff management. There is very little requirement for you to engage in activities covered by the course. The predominant focus of the course if for those whose role is strongly focused in training and development. It is considered that there is an insufficient connection between the skills and knowledge required in your current duties and the course. As there is an insufficient nexus between the course of self education and your current income earning activities, the self education expenses associated with the course are not incurred in earning your assessable income. Consequently you are not entitled to a deduction for the expenses under section 8-1 of the ITAA 1997. | Detailed Reasoning - Graduation: The deductibility of expenses incurred to attend a graduation ceremony was considered in Berrett v. FC of T 99 ATC 2127; (1999) 41 ATR 1262 ( Berrett's case ). In that case the taxpayer was employed by the Australian Taxation Office in Melbourne as an Administrative Services Officer. He was enrolled in a Masters degree by correspondence through a Sydney University. The employer paid all necessary course fees and provided paid study leave. The taxpayer drove from Melbourne to Sydney to attend his graduation ceremony and claimed a deduction for the costs of travel, accommodation and the hire of an academic gown In disallowing the taxpayer's claims the AAT held that it was the course of study itself and the completion of the course which had the required nexus with the gaining of assessable income. It was a matter of personal choice for the taxpayer to travel to the graduation ceremony as he was entitled to receive the degree in absentia . Whether he attended the ceremony or received his degree in the post had no impact on the taxpayer's knowledge or ability to carry out his employment duties or on his promotion prospects. As in Berrett's case , the cost of hiring the gown and other costs relating to the graduation do not have the required nexus to gaining your assessable income. You are therefore, not entitled to a deduction for the costs involved in attending the graduation.

Relevant facts: The arrangement that is the subject of the private ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are: | · your application for private ruling which included: | o a copy of your letter of full time employment; | o Key Result/Performance Area 200X; | You are a customer service manager. | You are undertaking a Bachelor degree. | You have incurred costs for the course, books and also for the hire of a graduation gown and other costs relating to graduation.