Private ruling: Self-education expenses
Published: April 2014
Date scheme commenced: 1 July 2011

Ruling: Question and Answer: | Are you entitled to a deduction for self-education expenses? | Yes | The ruling applies for the following periods: | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014

Relevant facts and circumstances: You have been employed on a casual basis for several years. Your employment duties include: • Performing a number of duties in the logistics field • Participation and supervision of different special projects in the logistics field • Development of tools to increase productivity • Working in an IT role • Liaising with many different branches to resolve system discrepancies • Training of other staff Skills essential to your job include: • Detailed knowledge and commitment to warehouse operations quality management services • Strong numeracy and literacy skills • Knowledge of computer systems • Understand relevant KPI's that are aligned to the customer's operations • Able to work efficiently without causing errors • Highly effective interpersonal and communication skills • Ability to establish and maintain effective empathy and rapport with personnel at all organisational levels within and external to your employer A few years after commencing your employment, you began Diploma and Bachelor degree. You plan to complete the qualification in the relevant income year. You have provided a list of the units you have completed and those you are currently studying and stated the percentage (including the reason) the unit is relevant to your employment. You have been studying full time and working part time during semester time. You work full time when you are not studying. Your employer supports your study and has indicated you are a senior member of the team with a broad depth of knowledge in all aspects of your employer's business and systems. Your employer has indicated on completion of the course you may be considered for management and project roles in the same organisation.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: The Commissioner's view on the deductibility of self-education expenses is contained in Taxation Ruling TR 98/9. These guidelines have been established through the views taken by the Courts, Boards of Review and Administrative Appeals Tribunals. In accordance with paragraphs 13 and 14 of TR 98/9, expenses of self-education 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, as stated in paragraph 15 of TR 98/9, 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). | Detailed Reasoning - Your circumstances: In your case you have been employed on a casual basis for several years. Your employment duties include: • Performing a number of duties in the logistics field • Participation and supervision of different special projects in the logistics field • Development of tools to increase productivity • Working in an IT role • Liaising with many different branches to resolve system discrepancies • Training of other staff Your employer has indicated that on completion of the course you will be considered for management and project lead roles. In addition, your employer is supporting your studies by being flexible with working hours through an agreement between you and your employer. It is accepted that the units in your course will enhance the skills that are required in the performance of your duties as a logistics worker (including project work and training other staff) and may also lead to an increase in income. Your circumstances are similar to the example in Taxation Ruling TR 98/9 at paragraph 46: 46. Example: Kieran, a computer salesman, takes six months leave without pay to undertake a business administration course. He has an agreement with his employer that, upon successful completion of the course, he will be promoted to an assistant manager position with his current employer. Kieran is allowed a deduction for the costs of the course because it leads to an increase in income from his current employment. You have provided a list of the units you have completed and also those being currently studied. You have also given the percentage each unit relates to your employment and the reason why you consider the percentage is relevant. We accept the relevance percentage you have calculated for each unit. In your case the self-education expenses incurred have the necessary and relevant connection with the earning of your assessable income as they enhance the skills required in your current position and may result in an increase in income in your current income earning activities with the same employer. You are therefore entitled to a deduction under section 8-1 of the ITAA 1997 for self-education expenses relating to your a Diploma and Bachelor course. The self-education expenses you can deduct will be subject to a reduction of up to $250 in accordance with section 82A of the Income Tax Assessment Act 1936 .