Private ruling: The deductibility of your self education expenses
Date of advice: 14 March 2016
Published: May 2016
Ruling period: Year ended 30 June 2015
Date scheme commenced: 01 July 2014

Ruling: Q1: Are you able to claim a deduction for the costs of undertaking a Graduate Diploma as work related self-education expenses? | A1: No.

Relevant facts and circumstances: The arrangement that is the subject of the 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: You are a registered nurse and a specialised Nurse after completing a Graduate Certificate in this specialised field which allowed you to progress into an area of specialist nursing. You are currently undertaking a Graduate Diploma. The course will provide you with the opportunity to develop your knowledge and skills in caring for critical patients in the specialised Unit. You state that you will be a resource who could provide education to the rest of the specialised unit on issues specific to your chosen field. Your employer has indicated that it is professional development and has approved leave without pay for you to attend the course. You are still working one rostered shift per fortnight. You are not receiving any reimbursement or allowance from your employer towards your course of study. You are funding your own education expenses. Even though the course is considered professional development in your current position you state that there will be no increase in assessable income likely unless you seek employment in a specialised unit which would necessitate a move to another place of employment.

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 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. Paragraphs 13 and 14 of TR 98/9 provide that self-education expenses will satisfy the requirements of section 8-1 of the ITAA 1997 if: • a taxpayer's income-earning activities are based on the exercise of a skill or some specific knowledge, and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge; or • 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 their current income-earning activities in the future. Therefore, provided there is sufficient connection between your course of self-education and your current income earning activities, you are entitled to claim a deduction for your self-education expenses. However, paragraph 15 of TR 98/9, provides that self-education expenses will not be deductible if the study is intended to: • enable you to get employment; • enable you to obtain new employment; or • to open up a new income-earning activity (whether in business or in your current employment). This includes studies relating to a particular profession, occupation or field of employment in which a taxpayer is not yet engaged. The expense is considered to be incurred at a point too soon to be regarded as incurred in gaining or producing assessable income ( FC of T v. Maddalena 71 ATC 4161; 2 ATR 541). Although you may gain knowledge and skills from the course that could be of some assistance in your work, the predominant focus of the postgraduate coursework is for those with a nursing degree who want to specialise in this field and who are seeking registration with the relevant authority. It is considered that there is an insufficient connection between the skills and knowledge required in your current duties as a specialised Nurse and the course. Furthermore, it is considered that the study is designed to open up a new income earning activity. 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. Accordingly, you are not entitled to a deduction for expenses incurred in gaining a Graduate Diploma in this specialised field under section 8-1 of the ITAA 1997.