Private ruling: Work related self-education expenses
Date of advice: 3 March 2017
Published: August 2017
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

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

Relevant facts and circumstances: You are a sole trader in the business of writing, and you generate revenue from the articles you have published. You completed an online course designed to master the art of generating more income for your business. You took up the course for the purpose of growing your business and increasing your business income, and the course included specific detailed steps on how to grow a business income. You believe the course helped you achieve clarity of thinking and your business goals, prepared your mind for writing and improved your productivity. There are benefits from the course which you can use immediately. Even though the course contains no specific content on your line of business, it does have helpful materials on marketing, wealth building and entrepreneurship.

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. TR 98/9 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. If the 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, the self-education expenses are allowable as a deduction. However, paragraph 42 of TR 98/9 specifies that 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 then the cost of the course is not allowable. We consider that the course of training programs that you took is too general in terms of your current income earning activities, and as such, does not have the necessary connection with your current income earning activities. While it is acknowledged that you would have derived some benefit from completing the course, in terms of self-improvement and personal development, it is not considered to have a sufficient nexus to your current income earning activities, and therefore the cost of the course is considered private in nature and is not deductible under section 8-1 of the ITAA 1997.