Private ruling: Work Related Expenses: Self Education
Date of advice: 10 October 2018
Published: December 2018
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20XX

Ruling: Q1: Am I entitled to a deduction for course fees of $X per unit for the costs of studying the units “Unit 1” and “Unit 2” at the XYZ Business School? | A1: Yes | Q2: Am I entitled to a deduction for an allocated portion of my internet usage and home office expenses for studying a degree at this Business School? | A2: Yes

Relevant facts and circumstances: You came to Australia and accepted employment in summer 20XX where you have a sales role. The advertisement for this position required that applicants hold a Bachelor degree. Your role includes provision of coaching, development and motivation of other sales representatives and this has been the case since you joined your employer. After arriving in Australia you undertook a Bachelor degree through the XYZ Business School. This degree focused on accounting and management although your position is a sales position. You studied Unit 1 and Unit 2 in the 20XX/20YY year, completing these units (and hence your degree) in summer 20XX. After completing this degree your employer sponsored you under an employer sponsored visa. You have provided a list of units you studied in your degree as well as a description for each unit in order to establish a nexus between each individual unit and your current duties. You wish to claim course fees for the two units you studied in 20XX/20YY.

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 Taxation Ruling 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). Further, paragraph 26 of TR 98/9 states that expenses relating to self-education which are compulsory and unavoidable, as well as those for which a need can be shown in terms of fulfilling the requirements of the course, are regarded as being 'necessarily incurred' and are expenses of self-education. Paragraphs 33 and 34 of TR 98/9 are particularly relevant – 33. The High Court of Australia has indicated that the expenditure must have the essential character of an outgoing incurred in gaining assessable income or, in other words, of an income-producing expense ( Lunney v. FC of T ; Hayley v. FC of T (1958) 100 CLR 478 at 497-498; (1958) 11 ATD 404 at 412). There must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of the assessable income ( Ronpibon Tin NL v. FC of T (1949) 78 CLR 47 at 56; (1949) 8 ATD 431 at 435). 34. Consequently, 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. The units you studied in 20XX/20YY (Unit 1 and Unit 2) are judged to have sufficient connection to the skills or knowledge used in your current income earning activity. These units provide learning outcomes that are arguably directly connected to your current work duties and hence the course fees for these units are deductible. A proportion of the costs of a home office and internet usage are allowable deductions. You may make a claim for these costs on a reasonable basis.