Private ruling: Self-education expenses
Date of advice: 11 August 2017
Published: November 2017
Ruling period: Year ended 30 June 2017 | Year ended 30 June 2018
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you entitled to a deduction for self-education expenses? | A1: Yes.


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 ITAA 1997 prevents it. Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business 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). 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. In your case, it is accepted that the studies will maintain or enhance the skills that are required in the performance of your current work duties. Consequently the self-education expenses incurred in undertaking the course have the necessary and relevant connection with the earning of your assessable income and are therefore deductible under section 8-1 of the ITAA 1997. Expenses incurred on the cost of travel between home and the university, stationery and textbooks are considered self-education expenses and are allowable as deductions under section 8-1 of the ITAA 1997 to the extent that they relate to your assessable income. The summer semester tuition fees that are not supported by the Commonwealth government are also an allowable deduction. The necessary substantiation of your expenses need to be kept in relation to any deduction claimed. Please note that the self-education expenses you can deduct may be subject to a reduction of up to $250 in accordance with section 82A of the Income Tax Assessment Act 1936. An explanation on how this provision operates is provided at paragraphs 119 to 155 of TR 98/9, which can be accessed on the Australian Taxation Office's website at www.ato.gov.au .

Relevant facts: You are currently studying for a graduate entry degree. | You commenced your study in 2016 and expect to complete the program in December 2019. | You work full time as a consultant specialising in certain areas. | You do this work using skills gained through multiple university degrees. | You are doing the degree to obtain a certificate and to improve existing skills in specified areas. | The study enhances your existing skills used daily in your full time work. | Recent contracts have been gained on the basis that you have a unique skill set. | You are incurring costs for textbooks, stationery supplies and travel to university for mandatory campus-based weekends once per semester. You incur tuition fees for units taken in summer semester which have no Commonwealth support.