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Edited version of your written advice

Authorisation Number: 1051284124868

Date of advice: 28 September 2017

Ruling

Subject: Self Education Expenses - Allowable Deduction

Question 1

Are you entitled to a deduction for self-education expenses for instruction training?

Answer

Yes

This ruling applies for the following periods:

Year ended 30 June 2017

The scheme commences on:

1 July 2016

Relevant facts and circumstances

You attended compulsory training sessions that related to your employment at a cost to yourself under the terms of your employment.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Taxation Ruling TR 95/14 (Paragraph 71)

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 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 discusses the circumstances under which self-education expenses are allowable as a deduction. A deduction is allowable for self-education expenses if a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of the self-education enables the taxpayer to maintain or improve that skill or knowledge (Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348.

Similarly, 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, a deduction is allowable.

However, no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to open up a new income-earning activity, whether in business or in the taxpayers current employment. Such expenses of self-education are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income (see Federal Commissioner of Taxation v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161; and paragraphs 15, & 48 62 of TR 98/9).

Studies undertaken in order to obtain employment in a new field are considered to have been incurred at a point too soon to be regarded as incurred in gaining or producing assessable income and such expenses are not deductible.

Taxation Ruling TR 95/14 provides that the deduction for:

Conferences, seminars and training courses : A deduction is allowable for the cost of attending conferences, seminars and training courses. There must be a relevant nexus with the current income-earning activities of the employee teacher (paragraphs 71 to 75).

In order to claim a deduction for work-related self-education expenses, you must be able to demonstrate that the course of study you are undertaking has a sufficient connection to your current employment to qualify as being work-related.

You would need to demonstrate that you are improving specific skills or knowledge used in your current employment or show that at the time you were working and studying, your course led, or was likely to lead, to an increase in employment income. More information on how to determine if there is sufficient connection between your work and your study is available on our website.

Generally, being able to provide a letter from your employer confirming the connection between your work and your employment would be suitable demonstration of the connection.

Further, to show that your study is connected to your current employment, you would need to be able to demonstrate that your employment started before your course of study started. This would show that the course of study is undertaken as part of your current work, rather than to gain new employment (either in securing your current role or a future role).

Conclusion

As the deduction amount is related to a training course that maintained or improved a skill required for your work activities and shows an established connection between the course and your work activities at that time, you are eligible to claim this as a deduction on your tax return.

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