Edited version of private ruling

Authorisation Number: 1011823935741

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Ruling

Subject: Self education expenses

Question

Are you entitled to a deduction for self education expenses incurred in relation to a Certificate in Human Nutrition and a Nutrition for Disease Management course?

Answer

No.

This ruling applies for the following periods:

Year ending 30 June 2011

The scheme commences on:

1 July 2010

Relevant facts and circumstances

You have been employed for the past two years as a full time cook.

You have a Certificate III in Commercial Cookery.

You have provided a list of duties for your current position that includes supervising and guiding staff.

Your duties include:

· Unlocking fridge and cupboards, set breakfast tea trolleys

· Prepare breakfast that includes cereals and puree fruit, porridge and semolina and heat milk for cereals, eggs/grilled tomatoes, fruit, prunes , yoghurt and dry cereals and juices

· Distribute trolleys and trays to dining room.

· Prepare morning tea - that is, baking of cakes and biscuits and toast

· Commence preparation of lunch as per menu - vegetables, puddings and soft deserts.

· Prepare 'lip-plates' for vitamised food

· Puree vegetables and main meat for lunch

· Serve meals

· Washing and general cleaning up equipment

· Prepare evening vitamised meal

· Daily cleaning of cooks area

· Complete paper work

· Order fruit vegetables, diary products, meat, fish, chicken and other groceries two to three times per week.

Menus are prepared in line with advice on dietary requirements for individual residents by your employer.

You intend to complete a course in Human Nutrition to help you in understanding the dietary issues and provide nourishing food.

The course includes the following subjects and is for 18 months and completed externally:

Human Nutrition 1

· Introduction to nutrition

· The digestive system

· Absorption and enzymes

· Energy value and foods

· Carbohydrates and fats

· Proteins

· Vitamins and minerals

· Water

· Nutrient disorders

Human Nutrition 11

· Cooking and its affect on nutrition

· Food processing and its affect on nutrition

· Recommended daily intake of nutrients

· Vitamins

· Minerals

· Planning a balanced diet

· Assessing nutritional status and needs

· Timing of meals and needs for special groups

Human nutrition 111

· Problems with eating

· Dental problems

· Fibre and bowel diseases

· Different ways of eating

· Food toxicity

· Detoxification/body cleaning

· Consulting/ giving advice

You also hope to do a Nutrition for Disease Management course which includes the following subjects:

· Introduction to therapeutic nutrition

· Allergies and intolerances

· Diabetes

· Heart disease, hyperlipidemia and arteriolosclerosis

· Rental/kidney conditions

· Cancer

· Digestive disorders- esophaegus, small intestine, colon

· Other metabolic conditions

· Strategic diet planning for a medical condition.

As a cook, nutrition is an important element and as you are a provider of food and dealing with people who have various health issues it is important that you have a good understanding of nutrition.

You believe that having these qualifications and with your current work experience as a cook can only benefit your current employer and the potential of a better income and greater responsibility.

Your current employer is moving from its present location to a new area due to the fact that they are unable to maintain compliance requirements. As the new location will be some distance away you intend to look for new employment with another health care institution that is closer to where you live.

Your intention is to continue to work in health care institutions in the future.

Your employer will not be providing you any financial support and the course will be undertaken in your own time.

Detailed reasoning

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. Self-education expenses are deductible where they have a relevant connection to the taxpayer's current income earning activities.

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; (1961) 8 AITR 406).

Similarly, if the study of a subject of self-education objectively leads to, or is likely to lead to an increase in a taxpayer income from his or her current income earning activities in the future, a deduction is allowable.

However, no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to open up a new income earning activity, whether in business or in the taxpayers current employment. This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. Such expenses of self-education are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income (FC of T v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161). They are incurred in getting, not in doing, the work which produces the income.

Furthermore, paragraph 42 of TR 98/9 provides that no deduction will be allowable if the course of study is too general in terms of the taxpayer's current income earning activities and there is not a sufficient nexus between the course of self education and the income earning activity.

In light of the tests outlined above, what needs to be fully considered is whether the undertaking of the Certificate in Human Nutrition and a Nutrition for Disease Management course would contribute to the skills and knowledge required in your role as a cook within the aged health care facility. Your duties as a cook are to essentially prepare meals as required from menus prepared by your employer. The menus are prepared by your employer in accordance with advice of dietary needs of individual aged residents. In addition you intend to change employment due to your employer having to relocate the aged care facility.

You have provided details of the subjects to be completed for the courses and given a brief summary of how you believe the courses would assist you in your role as a cook.

We acknowledge that some of the subjects studied may assist you in your role as a cook. However, the courses are developed for people aiming to work as a Nutritionist or as a Nutritional Counsellor on all aspects of Human Nutrition. There is not sufficient nexus between the course you intend undertaking and your current employment as a cook.

In addition, there is no indication that the course would lead to, or likely lead to, an increase in your income from your current employment.

It is considered that the course will enable you to obtain new skills and specialised knowledge with a qualification which will allow you to move to a new area of employment and undertake a new income earning activity.

Therefore, it is considered that your self education expenses would not be incurred in earning your current assessable income. The assessable income to which the studies are directed is the future income from employment at the successful completion of the course. As such, the expenses are incurred at a point too soon to be regarded as incurred in gaining or producing your assessable income and are not deductible under section 8-1 of the ITAA 1997.

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