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Edited version of your written advice
Authorisation Number: 1012713725890
Ruling
Subject: Self-education
Question
Are you entitled to a deduction for the cost of an examination?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2014
The scheme commenced on
1 July 2013
Relevant facts
You worked as a professional overseas.
You have worked as a full-time professional assistant in Australia since mid 2013.
You cannot work as a professional in Australia until you complete an exam to have your qualification recognised in Australia.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 allows a deduction for losses and outgoings which are incurred in the course of gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature.
While the following cases involve solicitors, the principles are applicable in your situation.
In Case J30 77 ATC 282; 21 CTBR (NS) Case 52, a law clerk claimed a deduction for admission fees to practise as a solicitor. After admission he continued in the same employment performing the same duties on increased salary. It was considered that the expense was not incurred in doing work as a law clerk but in obtaining work as a solicitor and this would be so notwithstanding that it was with the same employer. The claim was disallowed.
The applicant in Case Z1 92 ATC 101; AAT Case 7541 (1992) 22 ATR 3549 claimed a deduction for expenses that led to her admission as a solicitor. The Tribunal held the admission fees were of a capital nature and were, therefore, not an allowable deduction. The admission expenses secured the applicant a 'lasting advantage'.
The exam you undertook was a means of having your existing qualifications recognised in Australia. As such, the cost is not incurred in educating yourself. Rather, it was incurred to allow you to practice your profession in Australia. Such expenses provide you with a lasting benefit and are considered to be capital in nature. A deduction is therefore not allowable.
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