Private ruling: Self education
Published: November 2011
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 2010

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: Self education expenses generally fall for consideration under section 8-1 of the Income Tax Assessment Act 1997 . This section allows a deduction for losses and outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent to which they are capital, private or domestic in nature. To be deductible under this section an expense must have the essential character of an expense incurred in gaining or producing assessable income or, in other words, of an income-producing nature. The Commissioner's view on the deductibility of self education expenses is contained in Taxation Ruling TR 98/9. In accordance with TR 98/9, expenses of self education are allowable if: § a taxpayers 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 taxpayers income from his or her current income-earning activities in the future. Costs of self education are not deductible if the study is to enable a taxpayer to get employment, to obtain new employment or to open up a new income-earning activity (whether in business or in the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. In such situations the expenses 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]. In the Administrative Appeals Tribunal case Pujara v. Federal Commissioner of Taxation (2003) AATA 331 ( Pujara's case ), the taxpayer was enrolled in a Masters of Business Operations Management course at the University of Western Sydney. The purpose of the course was to provide advanced theoretical and practical skills in managing quality in a business organisation, including logistics management and statistical process control. The taxpayer was also employed part-time as an assembler store person for a pharmaceuticals company. Their duties included the manual assembly of orders, updating records of bulk stock and assisting with stock distribution. In denying the taxpayer a deduction for his self education expenses, the Tribunal determined at paragraph 19: the routine nature of the applicant's activities was such that the necessary skills and performance could be maintained without further training. Objectively, the new information and learning he acquired through the Masters degree was at a higher level than he required for his position. It would not improve or tend to improve his proficiency in a relatively junior role. The "perceived connection" between the Masters degree and the applicant's activities as an assembler store person is missing. The Tribunal is not satisfied, therefore, that the expenditure on self education during the 1998-99 year of income was incidental and relevant to gaining or producing his assessable income. The Tribunal also determined that the taxpayer's course of education was unlikely to lead to an increase in this income from his current employment. It is considered that your case is similar to Pujara's case in that the degrees you are undertaking is at a much higher level than would be required to carry out your current duties as a pharmacist. Although you may gain some knowledge and skills from the subjects studied that could be of some assistance in your work, the predominant focus of the degrees is to provide the skills to open up a new income earning activity as a medical practitioner. Therefore, you are not entitled to a deduction for 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: You are currently employed as a pharmacist. | You are undertaking two medical bachelor degrees.