Private ruling: Self-education expenses
Published: March 2013
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 1 July 2010

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

Relevant facts and circumstances: You undertook a business course. At the time that you started the course you were employed at a hotel as a housekeeper. Whilst undertaking the course you applied for training in finance at the hotel and you were granted a position working at nights as a Front Office all-rounder. You worked in this position at the hotel for over a year then you were offered a full-time position as a receptionist at the hotel as the night work was affecting your health. You provided a list of your duties at the hotel. You provided a list of course subjects. You incurred course fees and have documentation to support the expense incurred.

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. Self-education expenses are deductible where they have a relevant connection to the taxpayer's current income earning activities. Tax Ruling TR 98/9 provides that 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. However, no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to open up a new income-earning activity, whether in business or in the taxpayers current employment. Such expenses of self-education are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income (see Federal Commissioner of Taxation v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161; TR 98/9). In your case, at the time of you undertook the course you were employed as a housekeeper at a hotel. You undertook the course to advance your career prospects in the hospitality industry by undertaking a course in business. The duties you were required to carry out in your role as a housekeeper are general in nature relative to the subsequent specialised study or training that you have undertaken. It may be argued that you have utilised this more specialised knowledge generally in your front office role at the hotel. 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 hotel receptionist. Therefore, you are not entitled to claim a deduction for self-education expenses under section 8-1 of the ITAA 1997 because the expenses were incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.

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