1012520710605 | Legal database

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Edited version of your private ruling

Authorisation Number: 1012520710605

Ruling

Subject: Self education expenses

Question

Is a deduction allowable for the expenses you incurred in undertaking a bridging course for overseas trained nurses?

Answer

This ruling applies for the following periods:

Year ended 30 June 2012

Year ended 30 June 2013

The scheme commences on:

1 July 2011

Relevant facts and circumstances

You qualified as a nurse overseas,

So that you could work as a registered nurse in Australia, you had to do a bridging course for overseas trained nurses.

You were not working when you did the course, and you didn't receive any education assistance/payments.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Summary

The expenses you incurred in undertaking the bridging course for overseas trained nurses were a prerequisite to you being able to earn assessable income from employment as a nurse in Australia. They were not actually incurred in the course of carrying out the duties of that employment. The expenses that you incurred in relation to the bridging course are therefore not deductible.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for a loss or outgoing to the extent to which it is incurred in gaining or producing assessable income, except where the loss or outgoing is of a capital, private or domestic nature, or is incurred in earning exempt income.

The deductibility of self education expenses falls for consideration under section 8-1.

Therefore, in considering whether you are entitled to a deduction for the costs incurred in doing the bridging course for overseas trained nurses, it is necessary to consider whether the expenses were incurred in the course of producing your assessable income.

Expenses incurred in obtaining employment

Expenses incurred by an employee in obtaining employment are not deductible because the expenses come at a point in time too soon to be regarded as being incurred in gaining assessable income. The expenditure is incurred in getting, not in doing, work as an employee.

The leading case on this issue is FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541 (Maddalena's Case). In that case, a taxpayer who earned his living as an employee electrician and as a professional footballer claimed for travel and legal expenses incurred in seeking and obtaining a contract with another Rugby League Club. It was held that the status of a professional footballer vis--vis his club is that of an employee and that the expenditure claimed was not deductible. Barwick CJ stated (ATC at 4162; ATR at 548):

'The costs to an employee of obtaining his employment does not form an outgoing incurred in the course of earning the wages payable in the employment.'

This principle has been applied to deny taxpayers on unemployment benefits deductions for expenses associated with looking for a job. Similarly, expenditure that is a prerequisite to obtaining particular employment is not deductible.

Self education expenses

Taxation Ruling TR 98/9 sets out the circumstances in which self education expenses are allowable as deductions.

The Ruling states that a deduction is not allowable if the education is designed to enable a taxpayer to get employment, to obtain new employment, or to open up a new income earning activity (Maddalena's Case).

Your self education expenses

The expenses you incurred in undertaking the bridging course for overseas trained nurses were incurred in order for you to be able to take up the duties of new employment as a nurse in Australia. However, these education expenses were a prerequisite to you being able to earn assessable income from that employment, they were not actually incurred in the course of carrying out the duties of that employment.

Consequently, the expenses that you incurred in relation to the bridging course are not deductible under section 8-1 of the ITAA 1997.

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