Private ruling: Self-education expenses
Published: October 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for self-education expenses relating to a degree in a specialist topic (the course)? | A1: Yes.

Relevant facts and circumstances: You commenced an Advanced Diploma in a specialist topic. You started working at your employer some time later. Career opportunities at your employer are only available to qualified people in the specialist topic, or students of the specialist topic. This is because your employers' 'point of difference' from other similar practices is their qualified staff on the shop floor being able to give expert advice to their customers. Further your employer has a growing clinical practice where customers can pay extra to have a full consultation with qualified staff to get a more personalised service. At your employer a Bachelor degree is the preferred qualification over an Advanced Diploma, as there is more clinical experience (in terms of number of hours participating in the student clinic) with the Bachelor degree, and the level of study goes a stage further, which is much more beneficial for the services provided to customers. You recently commenced the course in your specialist topic. On completion of the course your regular work duties won't change, however you will be able to also provide full consultations with clients for a more personalised treatment plan. You will also receive a higher hourly rate of pay. Further you will also be able to prescribe 'practitioner only products' from a brand that only allows qualified practitioners to be able to dispense. HECS-HELP is not available for the course. You have incurred expenses in relation to the course during the 2014 financial year.

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 ( Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348). In your case, it is accepted that the course maintained or enhanced the skills that were required in the performance of your employment duties at the time the course was undertaken. 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 - Limit to the deductibility of self-education expenses: In certain circumstances you may have to reduce your allowable self-education expenses by $250. However you may have other types of expenses some of which are not allowable as a deduction that can be offset against the $250 before you reduce the amount you can claim for allowable expenses. Further information on how to work out your self-education expenses can be found in our publication, Individual tax return instructions 2014 , and paragraphs 119 to 155 of TR 98/9. This publication and ruling can be accessed by visiting our website at www.ato.gov.au.