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Edited version of your private ruling
Authorisation Number: 1012510817255
Ruling
Subject: Self-education expenses
Question
Are you entitled to a deduction for your self-education expenses?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2013
The scheme commences on:
1 July 2012
Relevant facts and circumstances
You were a nurse in an overseas country.
When you came to Australia you were told that you would have to undertake further study to be able to meet the criteria for registration.
While you were studying you worked as an assistant nurse.
After completing the course you received your registration and you are now a registered nurse.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Summary
You are not entitled to a deduction for your self-education expenses as the expenses are incurred to open up a new income earning activity as a registered nurse.
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 which are incurred in the course of gaining or producing assessable income, unless the losses or outgoings are of a capital, private or domestic nature.
The Commissioner's view on the deductibility of self education expenses is contained in Taxation Ruling TR 98/9. In accordance with paragraphs 13 and 14 of TR 98/9, expenses of self-education will satisfy the requirements of section 8-1 of the ITAA 1997 if:
· a taxpayer's income earning activities are based on the exercise of a skill or some specific knowledge, and the course of self education enables the taxpayer to maintain or improve that skill or knowledge; or,
· the study of a course of self education objectively leads to, or is likely to lead to, an increase in a taxpayer's income from their current income earning activity in the future.
Therefore, provided there is sufficient connection between your course of self education and your current income earning activities, you are entitled to claim a deduction for your self education expenses.
However, as stated in paragraph 15 of TR 98/9, self education expenses will not be deductible if the study is intended to:
· enable you to get employment,
· enable you to obtain new employment, or
· to open up a new income-earning activity (whether in business or in your current employment).
This includes studies relating to a particular profession, occupation or field of employment in which you are not yet engaged. The expense is considered to be incurred at a point too soon to be regarded as incurred in gaining or producing assessable income (FC of T v. Maddalena 71 ATC 4161; 2 ATR 541).
In your case, you gained your qualification as a nurse in an overseas country and practised there before coming to Australia. As your overseas qualifications were not accepted in Australia, you were required to complete further study to be able to meet the criteria for registration with the Board.
While we acknowledge that the knowledge gained from the course may have been of some assistance in your occupation as an assistant nurse, the predominant focus of the course is to provide the skills and qualifications to become a registered nurse in Australia. The subjects studied provided you with skills and abilities in advance of those you required in your employment as an assistant nurse.
The self education expenses are therefore considered to have been incurred at a point too soon to be regarded as incurred in gaining or producing assessable income from this position. The decision in Maddalena's case applies to your circumstances as the studies have been undertaken in order for you to gain employment as a registered nurse.
Therefore, your self education expenses are not deductible under section 8-1 of the ITAA 1997.
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