Private ruling: Self-education expenses
Published: August 2013
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to a deduction for costs incurred in completing your self-education course? | A1: No

Relevant facts and circumstances: You have completed a self-education course. You have indicated that you completed this course to improve your skills and assist in obtaining a higher position with your current employer. You have provided a letter from your employer which stated that your employer sees you as a valued employee and would like to see you move up to a higher position. They encouraged you to improve your skills and undertake a business 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 ( FCT v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348). However, paragraph 12 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. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. 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. It is considered that there is an insufficient connection between the skills and knowledge required in your current position and the course of study. Furthermore, it is considered that the study is designed to open up a new income earning activity. Accordingly, you are not entitled to a deduction for the expenses under section 8-1 of the ITAA 1997.