Private ruling: Self education expenses
Published: October 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for self education expenses? | A1: Yes. | Q2: Are you entitled to a deduction car travel between work and university using the cents per kilometre method? | A2: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Section 28-25 | Income Tax Assessment Act 1997 Section 900-15

Reasons for decision: Detailed Reasoning - Detailed reasons: 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 ( Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348). Similarly, if 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 his or her current income earning activities in the future, a deduction is allowable. The following types of expenses related to self education are allowable: · course or tuition fees; · the cost of professional and trade journals, text books and stationery; · airfares incurred for attending an educational institution. · where you are away from home overnight, accommodation and meals expenses incurred on attending an educational institution; and · internet expenses. In your case, it is accepted that the degree will maintain or enhance the skills that are required in the performance of your current employment duties. Consequently the self education expenses incurred have the necessary and relevant connection with the earning of your assessable income and are therefore deductible under section 8-1 of the ITAA 1997. | Detailed Reasoning - Car travel: Section 28-25 of the ITAA 1997 allows a deduction for car expenses calculated using the cents per kilometre method. Under the cents per kilometre method: · The deduction is calculated by multiplying the number of business kilometres the car travelled during the year by the number of cents per kilometre based on the cars engine capacity; · A maximum of 5,000 business kilometres may be claimed for each car; · A taxpayer does not need written evidence of car expenses but needs to be able to show how they calculated their business kilometres. As self education expenses are allowable, the cost of travelling between work and university is deductible using the cents per kilometre method.

You are undertaking a Master degree. | You paid course fees in July 2012 and March 2013. | You travel between work and university two times a week.