Private ruling: Deduction for work related self education expenses
Published: July 2012
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 01 July 2010

Ruling: Q1: Are you entitled to claim 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 losses and outgoings which are incurred in the course of gaining or producing assessable income, unless the losses or outgoings are of a capital, private or domestic nature. Taxation Ruling TR 98/9 discusses which self-education expenses are allowable as a deduction. At paragraph 13, TR 98/9 states that if a taxpayer's current 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, the self-education expenses are allowable as a deduction. Where there is insufficient connection between your course of self-education and your income-earning activities, the requirements of section 8-1 of the ITAA 1997 will not be satisfied. You were employed by a labour hire company to work as a project officer in a government department and were involved in the facilitation and establishment of a senior position. The graduate diploma course is a one year course designed to develop in students the initial knowledge base, competencies and skills upon which advanced skills can be built with the opportunity to complete further studies in the field. At paragraph 15, TR 98/9 states that no deduction is allowable for self-education expenses if the study is to enable you to get employment, enable you to obtain new employment, or to open up a new income-earning activity. This view is supported by the decision of the High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541 which establishes the principle that no deduction is allowable for self-education expenses if the study, viewed objectively, is designed to enable a taxpayer to get employment or obtain new employment. Such expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. Self-education expenses may be deductible only when they have the essential character of an income-producing expense. You commenced the graduate diploma course in 2011 and you took unpaid leave for study purposes and the study was not designed to maintain or improve a skill or knowledge that was exercised in your income-earning activity. It is considered that the course you are studying does not satisfy the tests outlined in paragraph 13 of TR 98/9 as the study did not maintain or improve your skills and knowledge in your duties as a HR project officer, rather it provided skills and knowledge in the study of the human mind and behaviour and is preparation for further studies. Self-education that is undertaken to provide you with new employment opportunities and increased income from different income earning activities are excluded in paragraph 15 of TR 98/9. Consequently, the self-education expenses incurred in undertaking the graduate diploma course during the 2011 and 2012 years do not have relevant connection with the earning of your assessable income. Therefore, you are not able to claim a deduction for your self-education expenses

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts and circumstances | You were employed by a labour hire company and worked in a human resource area as a project officer where you worked on several projects. | You commenced studying for a graduate diploma course in 2011 and expect to complete the course in June 2013. | You are undertaking these studies to enhance your professional qualifications. | You took unpaid time off work for your studies and you were not reimbursed for any expenses by your employer. | The course is a prerequisite for gaining entry to a course which you plan to commence in 2013 and when completed the qualification would further enhance your work skills. | You state that your current studies do not directly relate to your most recent position rather it is the masters course that would have a direct relevance to the HR areas that you are to specialise in.