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Edited version of private ruling
Authorisation Number: 1011579970221
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Ruling
Subject: Self education
Are you entitled to a deduction for self education expenses?
No.
This ruling applies for the following period
Year ended 30 June 2010
The scheme commenced on
1 July 2009
Relevant facts
You are an overseas qualified nurse.
You hold a student visa.
You are currently working as an assistant in nursing (AIN).
To allow you to work as a registered nurse in Australia, you are required to undertake further training.
You have undertaken a Diploma of Nursing.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Detailed reasoning
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 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 expense.
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, and
· 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 FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541).
Self education courses are generally undertaken to further yourself in a position that you already hold. In your case, you gained your qualification as a nurse in an overseas country and practised there before coming to Australia. You are now employed as an AIN as your qualification was not accepted in Australia and you were not able to gain employment as a nurse without gaining the appropriate qualification.
The cost of undertaking the training is incurred to gain recognition of your nursing skills and for the purpose of qualifying you to work as a nurse in Australia. That is, to get new employment as a registered nurse.
The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. Therefore, you are not able to claim a deduction for self education expenses under section 8-1 of the ITAA 1997.
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