Private ruling: Self-education expenses
Published: October 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for your self-education expenses? | A1: No.

Relevant facts and circumstances: You own a rental property. You incurred expenses to enrol in a number of wealth creation programs.

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

Reasons for decision: Summary: You can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income except where the loss or outgoing is private in nature (section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)). Expenditure on self-education is deductible under section 8-1 of the ITAA 1997 where the expenditure has a relevant connection to your current income-earning activities. The expenditure must be incidental and relevant in the sense of having the essential character of expenditure incurred in the course of gaining or producing assessable income. There must be a sufficient connection between the expense and the operations or activities which gain or produce your assessable income. Taxation Ruling TR 98/9 sets out the circumstances in which self-education expenses are allowable as deductions, and states that self-education expenses are deductible under section 8-1 of the ITAA 1997 where they have a relevant connection to the taxpayer's current income-earning activities. No deduction is allowable if the course of study is too general in terms of the taxpayer's income earning activities and there is not a sufficient nexus between the course of study and the income earning activity. In addition, 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 taxpayers current employment. This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. The expenses come at a point in time too soon to be regarded as being incurred in gaining or producing assessable income. They are incurred in getting, not in doing, the work which produces the income. In your case you incurred expenditure to enrol in a number of wealth maximisation programs. Wealth maximisation programs are too general in terms of deriving rental income from a rental property, and as such the expenditure you have incurred on the programs does not have a sufficient connection with your income producing activities. The expenditure is also incurred at a point too soon to be incidental and relevant to income you may derive from any future investment properties. The expenditure you incurred does not have the essential character of expenditure incurred in gaining or producing your assessable income. Accordingly, you are not entitled to a deduction under section 8-1 of the ITAA 1997 for the self-education expenses incurred.