Private ruling: Self-education expenses
Date of advice: 5 February 2018
Published: July 2018
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

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


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 ( FCT v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348). 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. 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 as a carer. 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 will undertake. It may be argued that you will utilise this more specialised knowledge generally in your current role as a carer. 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 duties as a carer. 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.

Relevant facts: You are employed as a carer in an aged care facility. | As a carer you are involved in the general care of the patients. | You are unable to undertake the more detailed duties that enrolled nurses undertake such as administering medication to patients. | You are studying part-time in a course that will qualify you as an enrolled nurse. | You will continue to work as a carer while you complete your studies. | Your duties as a carer will not change as a result of your study. You are unable to carry out duties such as administering medication until you are fully qualified as an enrolled nurse. | Your employer encourages you to study but you are responsible for all the costs relating to the study.