Edited version of private advice

Authorisation Number: 1052222465612

Date of advice: 27 February 2024

Ruling

Subject: Self-education expenses

Question 1

Are all the self-education expenses incurred in studying Course A and Course B an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No.

Question 2

Is part of your self-education expenses incurred in studying Course A and Course B an allowable deduction under section 8-1 of the ITAA 1997?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You were employed in Role A with Employer Z for a number of months.

While working for Employer Z you completed several subjects of Course A with Organisation A over a few months.

You provided details of the individual subjects for Course A and how they relate to your employment duties.

Organisation A's website provided specific subject content.

You worked for Employer Y for several months.

You provided a copy of the letter of offer.

The letter of offer confirms offer of employment as a full-time employee in Role A and Role B.

The letter of offer outlines your employment duties.

You completed several subjects of Course B with Organisation B while working for Employer Y.

You provided details of the individual subjects of Course B and how they relate to your employment duties.

Organisation B's website provided specific subject content.

The tuition fees for both courses were paid under the FEE - HELP scheme.

You did not receive any reimbursement from your employers for any of the self-education expenses.

You were audited on your work-related self-education expenses for previous income years. You objected to your tax assessments for these years. You provided a copy of the objection decision. The decision outlines the tasks and duties of Role A.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

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.

Self-education expenses are deductible under section 8-1 of the ITAA 1997 where they have a relevant connection to the taxpayer's current income earning activities.

Taxation Ruling TR 2024/3 Income tax: deductibility of self-education expenses incurred by an individual, discusses circumstances in which self-education expenses are allowable. 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 their current income earning activities in the future, a deduction is allowable.

In determining whether a deduction is allowable for self-education expenses we have to examine the entire course as a whole in terms of the connection to your income earning activities over the period the expenses were incurred. If the course is relevant and incidental to the income earning activities, then the entire course would be deductible.

You were employed with Employer Z and Employer Y in similar positions. The Course fees were incurred at multiple points in time over several months. Consideration needs to be given to the connection to the employment activities at the time the subjects were studied, and the fees incurred.

When the subjects that comprised part of Course A were being studied, you were employed in a related area.

Whilst employed in this role, you completed several subjects. After analysing each subject outline against the role and considering your explanation of how the subjects maintained or improved a skill specific to the work activities, we have concluded that some of the subjects have the relevant connection to your income earning activities.

The remaining subjects are considered too general in nature. We acknowledge there may be some minor connection, but the specific knowledge gained from the remaining subjects lack the substantive connection to your income producing activities. The high-level knowledge and skills acquired from the subjects are well beyond your requirements for your role.

Similarly, the subjects that were undertaken as part of Course B were completed while you were employed by Employer Y.

Whilst employed by Employer Y, you completed several subjects.

Analyses of each subject when compared to your role and considering your explanation of how the subjects maintained or improved a skill specific to the work activities, we have concluded that some of the subjects have the relevant connection to your income earning activities.

As with Course A, the remaining subjects are considered too general in nature and lack the substantive connection to your income producing activities. The high level of knowledge and skills gained from these subjects exceeds the requirements of your role.

Conclusion

Generally, taxpayer's can claim a deduction for study and self-education expenses if the course directly relates to their current work activities and results in or is likely to result in an increase in income from their current work activities.

Based on the information you have provided we have determined that some of the subjects undertaken in Course A and Course B have the necessary connection to your income earning activities and are considered allowable deductions under section 8-1 of the ITAA 1997.

Taxpayers can't claim a deduction for a self-education expense if at the time they incurred the expense it doesn't have a connection with their employment, only relates in a general way to their current employment and enables them to get employment of change employment.

The remaining subjects do not have the necessary connection with your income earning activities. They are considered only generally related to the work activities and therefore, are not allowable deductions under section 8-1 of the ITAA 1997.