Private ruling: Self education
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 the overseas qualification assessment, Taxation and Company Law subjects or subjects relating to your accounting qualification? | 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 (ITAA 1997). This section 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 provides the Commissioner's view on the deductibility of self education expenses. It states that self education expenses are incurred in gaining or producing assessable income if they are directly relevant to the person's employment activities or are likely to lead to an increase in income from those activities. A deduction for self education expenses will not be allowable if the study is to enable the taxpayer to gain employment or open up a new income earning activity ( Federal Commissioner of Taxation v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161). This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. This is because the expenses are seen to be incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. In Case J30 77 ATC 282; 21 CTBR (NS) Case 52 , a law clerk claimed a deduction for admission fees to practise as a solicitor. After admission he continued in the same employment performing the same duties on increased salary. It was considered that the expense was not incurred in doing work as a law clerk but in obtaining work as a solicitor and this would be so notwithstanding that it was with the same employer. The claim was disallowed. The applicant in Case Z1 92 ATC 101; AAT Case 7541 (1992) 22 ATR 3549 claimed a deduction for expenses that led to her admission as a solicitor. The Tribunal held the admission fees were of a capital nature and were, therefore, not an allowable deduction. The admission expenses secured the applicant a 'lasting advantage'. The overseas qualification assessment you undertook was a means of having your existing qualifications recognised in Australia and assess your eligibility and pre-requisites to start a qualification. As such, the cost is not incurred in educating yourself. Rather, it was incurred to have your qualification recognised in Australia. Such expenses provide you with a lasting benefit and are considered to be capital in nature. A deduction is therefore not allowable. 2 subjects Although you may gain knowledge and skills from the subjects that could be of some assistance in your work, the predominant focus of the subjects was to enable you to start your qualification. It is considered that there is an insufficient connection between the skills and knowledge required in your current duties and the subjects. As there is an insufficient nexus between the subjects of self education and your current income earning activities, the expenses associated with the subjects are not incurred in earning your assessable income. Consequently you are not entitled to a deduction for the expenses. Accounting qualification As stated above, we accept that undertaking an accounting qualification may provide you with some skills and knowledge that may benefit you in your current role. However, the predominant focus of the qualification is to enable you to become a professional. As noted from your current position description, you are only required to have a commerce degree, which you already have. It is considered that expenses relating to the qualification come at a point too soon to be regarded as incurred in producing your assessable income. You are not entitled to a deduction for any self education expenses relating to gaining your qualification. This includes course fees and travel.

Relevant facts: The arrangement that is the subject of the Ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are: | § the application for private ruling, | § your email with your position description attached | You came to Australia in 20XX. | You held a qualification. | You undertook an overseas qualification assessment which determined your eligibility and pre-requisites to start your work duties. | You undertook two subjects which were a requirement for you to start your work duties. These subjects were undertaken during 20XX. | You are now undertaking your work duties. | The study you undertook has no direct connection with your work related activities.