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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 self education expenses?
Answer
Yes
This ruling applies for the following period:
Year ending 30 June 2014
The scheme commences on:
1 July 2013
Relevant facts and circumstances
You were provided with a previous private ruling relating to self-education expenses that you have incurred in the previous income years.
You have not been able to finish the course due to family commitments.
You have provided a copy of your enrolment.
You intend on enrolling in a post graduate course that is tailored to your profession.
The course will assist you in your current income earning activities, particularly your management role.
The course covers a broad range of topics relating to all aspects of organisational management.
You will study part time and attend lectures in the evenings after work. You will complete the course of study within the next X months.
You have no intention of changing employers once your course is completed.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Income Tax Assessment Act 1936 Section 82A
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.
The courts have considered the meaning of 'incurred in gaining or producing assessable income'. In Ronpibon Tin NL & Tong Kah Compound NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; (1949) 56 ALR 785; (1949) 8 ATD 431 the High Court stated that:
For expenditure to form an allowable deduction as an outgoing incurred in gaining or producing the assessable income it must be incidental and relevant to that end. The words incurred in gaining or producing the assessable income mean in the course of gaining or producing such income.
Taxation Ruling TR 98/9 discusses circumstances in which self-education expenses are allowable as a deduction. If your current income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables you to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction.
In your case, it is accepted that the degree you are undertaking will maintain or enhance the skills that are required in the performance of your current employment duties. Consequently the self-education expenses incurred in undertaking the course have the necessary and relevant connection with the earning of your assessable income and are therefore deductible under section 8-1 of the ITAA 1997.
Note
The self-education expenses you can deduct may be subject to a reduction of up to $250 in accordance with section 82A of the Income Tax Assessment Act 1936. An explanation on how this provision operates is provided at paragraphs 119 to 155 of TR 98/9, which can be accessed on our internet website at www.ato.gov.au
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