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Edited version of your private ruling
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Ruling
Subject: Self education expenses
Question:
Are you entitled to a deduction for the cost of courses?
Answer:
No.
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts and circumstances
You are an employee in a manufacturing industry.
You undertook courses with Organisation X.
As part of the course you received a study kit which included:
· a workshop regarding property investing
· comprehensive manuals
· property contracts
· Attendance to a property workshop.
· Topics within the course covered the stages of joint ventures and property development.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
Summary
You are not entitled to a deduction for the costs associated with the Organisation X courses as it is considered that there is an insufficient connection with your income-earning activities.
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 deals with the deductibility of self-education expenses.
If a taxpayer's 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, the self-education expenses are allowable as a deduction.
In FC of T v. Finn (1961) 106 CLR 60 at 70; (1961) 12 ATD 348 at 352, Windeyer J stated:
... a taxpayer who gains income by the exercise of his skill in some profession or calling and who incurs expenses in maintaining or increasing his learning, knowledge, experience and ability in that profession or calling necessarily incurs those expenses in carrying on his profession or calling...
If a course of study is too general in terms of the taxpayer's current income earning activities, the necessary connection between the self-education expense and the income earning activity does not exist.
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 his or her current income earning activities in the future, the self-education expenses are allowable as a deduction.
No deduction is allowable for self-education expenses if the study is to enable a taxpayer to get employment, to obtain a new employment or open up a new income earning activity (whether in business or in the taxpayer's current employment). This includes studies related to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.
You are an employee in a manufacturing industry that has completed courses designed to educate you in purchasing real estate, property options and joint ventures.
It is considered that purchasing real estate and participating in joint ventures do not enable you to maintain or improve your existing skills or knowledge as an employee but that completely new skills and knowledge were acquired.
Whilst it is accepted that some of the content contained within the courses may have some relevance to your current employment, there is not a sufficient connection between the courses offered by Organisation X and your income earning activities.
No deduction is allowable for the cost of the Organisation X courses as they do not relate to your income earning activities.
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