Edited version of private advice

Authorisation Number: 1052312647651

Date of advice: 2 October 2024

Ruling

Subject: Self-education expenses

Question

Are you entitled to a deduction for self-education expenses incurred under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

Self-education expenses are deductible under section 8-1 of the ITAA 1997 where they have a relevant connection to the taxpayer's current income earning activities.

A partial deduction may be appropriate where only part of the self-education is relevant to your income-earning activities.

Your employment commenced on XX X 20XX.Self-expenses incurred from this point onwards are an allowable deduction.

Further information about self-education expenses can be found in Taxation Ruling TR 2024/3 Income tax: deductibility of self-education expenses incurred by an individual.

This ruling applies for the following periods:

Year ended 30 June 20YY

Year ended 30 June 20YY

The scheme commenced on:

13 April 20YY

Relevant facts and circumstances

You arrived in Australia on sub class student visa.

The visa requires you to apply to be enrolled in a course of study in Australia.

The visa requires you to start your course of study in Australia before you can start working in Australia.

The visa allows you to work up 48 hours a fortnight when your course of study is in session.

You first applied to a College on X X XXXX.

You enrolled in two courses course 1 and course 2.

You made an initial payment towards tuition fees for both courses.

This initial payment was a deposit fee for tuition, material fee and enrolment fee for course 1 and a deposit fee for course 2.

You commenced course 1 on X X XXXX.

You paid monthly until you had fully paid for course 1.

You commenced working as an XXXXXX.

You provided a signed copy of your job description.

Your job description requires you hold or be working towards the course 1 qualification.

You completed course 1.

You commenced course 2.

You commenced work as an XXXXXX.

Course 2 is a requirement of the XXXXXX role.

You provided an invoice statement for course 1.

You provided an invoice statement for course 2.

You have provided letter from the college stating you have started course 2.

You state both courses are full self-funded.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings 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.

Self-education expenses are deductible under section 8-1 of the ITAA 1997 where they have a relevant connection to the taxpayer's current income earning activities.

The costs of university studies or similar courses undertaken before commencing any occupation or employment are generally not deductible. They are not incurred in gaining or producing assessable income and are also regarded as a capital cost of equipping the person for employment.

As stated in paragraph 23 of TR 2024/3 Income tax: deductibility of self-education expenses incurred by an individual, no deduction is allowable for self-education expenses if the study will enable you to get employment, 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. These expenses are incurred at a point too soon to be regarded as incurred in gaining or producing your assessable income.

To be able to claim a deduction, the expenses must relate to your income earning activities at the time of incurring the expense (paragraph 72 of TR 2024/3). In determining whether a deduction is allowable for self-education expenses there would need to be an examination of how the courses are connected to your income earning activities at the time the expenses were incurred.

Application to your circumstances

The Commissioner accepts there is an identifiable nexus or connection between your duties of employment and commencing your studies as demonstrated through the position description, and subject outline provided. The courses of study are useful to your employment and are sufficiently connected with your employment.

Your employment commenced on XX X 20XX and self-education expenses incurred from this point onwards, are an allowable deduction. There is a sufficient nexus between the expenditure and your income- earning activities. You can claim a deduction for the course fees when the expenditure is incurred, that is, in the financial year you became liable for the expenses.

Expenses incurred before you commenced employment have been incurred at a point to soon to be considered as incurred in gaining or producing your assessable income to qualify as an allowable deduction. You are not undertaking income-earning activities to derive assessable income at the time you incurred these expenses.

Consequently, the initial payment and expenses incurred before you commenced employment have been incurred at a point to soon to be considered as incurred in gaining or producing your assessable income to qualify as an allowable deduction.

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