Private ruling: Self-education expenses
Date of advice: 24 May 2018
Published: August 2018
Ruling period: Year ended 30 June 201X | Year ending 30 June 201X
Date scheme commenced: 1 January 201X

Ruling: Q1: Will the self-education expenses be an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 ? | A1: No

Relevant facts and circumstances: In January 201X you commenced a Master of Spiritual Direction. The course is set to end in late 20XX. You are employed as a medical practitioner specialising in aged care. The course is designed to enable students to acquire a deep and broad understanding of key themes and methodologies in spiritual direction and to integrate knowledge of the field. You undertook the course to improve your communication and leadership skills.

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. 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 ) . In order to claim a deduction for work-related self-education expenses, you must be able to demonstrate that the course of study you are undertaking has a sufficient connection to your current employment to qualify as being work-related. 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. The cost of self-improvement or personal development courses is generally not allowable. The cost of your course is not an allowable deduction because the course is not designed to maintain or increase the skill or specific knowledge required for you to carry out your current employment. The expenses are more correctly characterised as related to a private matter.