Private ruling: Self-education expenses
Date of advice: 9 September 2015
Published: September 2015
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20YY
Date scheme commenced: 1 July 20ZZ

Ruling: Question and answer | Can you claim a deduction for expenses incurred in connection with a self-education course? | Yes.

Relevant facts and circumstances: You arrived in Australia on a student visa. Upon arrival you studied and achieved a Diploma in Enrolled Nursing. You commenced work as a casual worker in the nursing profession. You were employed on a full time basis and were sponsored by your employer for permanent residency as an endorsed enrolled nurse. You are currently on a bridging visa awaiting permanent residency. You have been pursuing a Bachelor of Nursing degree course at a university as a full fee paying student. You are doing this in order to broaden your knowledge and advance your career with the view to promotion and higher salary as a nurse. You are currently in your last year of studies. Your course fees paid for the 20XX are $X. Your course fees paid for the 20YY are $X. You are currently employed on a full time basis in the nursing profession.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1936 Section 82A

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. 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. It is considered that the study will maintain or improve your skill or knowledge used in your current income earning activity. As a consequence, you have incurred compulsory fees. Consequently you are entitled to a deduction for the course fees incurred. | Detailed Reasoning - Limitation on deductibility of expenses: Section 82A of the Income Tax Assessment Act 1936 operates to limit the amount of self-education expenses otherwise allowable under section 8-1 of the ITAA 1997. Only the excess of the self-education expenses over $250 may be considered for deduction under section 8-1. Therefore your claims will be reduced by $250: For 20XX you can claim: $X - $250 = $X For 20YY you can claim: $X - $250 = $X