Private ruling: Self-education deduction
Published: February 2014
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you able to claim a deduction for self-education expenses? | A1: No

Relevant facts and circumstances: You were employed. You ceased this employment and there was a period which elapsed prior to commencing your subsequent employment. You had a range of general duties required for your position. You started seminar one of your course. You paid for Seminar one. You started Seminar two of your course. You paid for Seminar two. There were a range of specific subjects required to be completed for your course.

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 taxpayers 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; (1961) 8 AITR 406). However, paragraph 12 of TR 98/9 states that no deduction is allowable for self-education expenses if the study is to enable the taxpayer to get employment, obtain new employment or to open up a new income-earning activity (whether in business or the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field or employment in which the taxpayer is not yet engaged. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. Several court cases have established general guidelines in determining the deductibility of self-education claims. The decision in FCT v. Maddalena (1971) 2 ATR 541; (1971) 45 ALJR 426; 71 ATC 4161, supports our view that no deduction is allowable for self-education expenses if the study, viewed objectively, is designed to enable a taxpayer to get employment or to obtain new employment. Such expenses would come at a point too soon to be properly regarded as incurred in gaining assessable income. In your case, you are employed. The duties you are required to carry out in your role are general in nature relative to the subsequent specialised study or training that you have undertaken. It may be argued that you will utilise this more specialised knowledge generally in your current role. However, when viewed objectively, this course is designed to enable you to obtain employment in a new role rather than assist you in performing your current duties. This conclusion is further supported by you ceasing that employment in mm/yyyy and there being a relatively large period of time between that and your subsequent employment. This adds weight to the study being the prime object and not being related to your then current employment. Therefore, you are unable to claim self-education expenses under section 8-1 of the ITAA 1997 because the expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.