Edited version of private advice

Authorisation Number: 1052410004738

Date of advice: 24 June 2025

Ruling

Subject: Self-education expenses

Question 1

Are you entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 for your self-education expenses in relation to studying a postgraduate course on educational research?

Answer 1

No.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

You are employed as a secondary teacher at X School.

An additional duty you take on is as a student mentor.

You applied for entry into a postgraduate course on educational research at an overseas university on XX XX 20XX.

You accepted an offer to enrol in the postgraduate course on XX XX 20XX.

Your registration will be complete on XX XX 20XX.

You intend to pay for the course fees in full by the end of the current financial year.

You will commence the course in the next financial year.

The usual expected length of the course for a full-time student is one year.

You will undertake the course as a full-time student.

You have applied for onsite accommodation at the education institution.

The course will not lead to an increase in salary in your current role.

You have not currently entered into any arrangement with your employer regarding leave while undertaking the course.

You will discuss with your employer taking leave without pay in term X of the school year.

If you are not granted leave without pay, you will resign from your workplace in XX 20XX and still undertake the course.

You provided a link to the official university admissions page for the course which links to the university's Department of Education course page.

The course page details the aims of the course and programme outcomes. Broadly they are to prepare the participating student for the role of a researcher in the field of education.

You spouse will accompany you to the university as they are moving temporarily to study there.

Your spouse applied for their course on XX XX 20XX.

Your spouse accepted the offer for their course on XX XX 20XX.

Your spouse's course will start on XX XX 20XX and finish on XX XX 20XX.

Family members will house sit your property while you are overseas.

You will incur the following costs: course fees of approximately $X, air fares of approximately $X, a laptop device costing $X, along with costs for textbooks and stationery.

You have not currently entered into any arrangements with your employer concerning, leave, allowances, rewards or bonuses in relation to the course.

Your employer has not currently confirmed any assistance for you to undertake the course.

Prior to accepting the course offer, you had a discussion with your supervisor, who subsequently provided you a letter of support dated XX XX 20XX which you have supplied.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Summary

Your self-education expenses in relation to studying a course on educational research are not deductible as the course does not have a sufficiently close connection to your current employment. This is because the course is specifically designed to prepare the participant for the role of a researcher in the field of education rather than to assist someone in the role of a secondary school teacher which is what you are employed as.

Although the two roles are both in the broad field of education, they are very different positions; one is to carry out research while the other is to teach students. Expenses to undertake a course aimed at providing the participant with the knowledge and skills to be a researcher in the field of education are not considered to be incurred in the course of earning income as a secondary school teacher.

Detailed reasoning

Section 8-1 of the ITAA 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.

It is necessary to determine whether there is the requisite connection between the particular outgoing and the operations or activities by which the taxpayer most directly gains or produces their assessable income (Charles Moore & Co (WA) Pty Ltd v. Federal Commissioner of Taxation [1956] HCA 77; Federal Commissioner of Taxation v. Hatchett [1971] HCA 47; Federal Commissioner of Taxation v. Cooper [1991] FCA 164 (Cooper's Case).

Taxation Ruling TR 2020/1 Income tax: employees: deductions for work expenses under section 8-1 of the Income Tax Assessment Act 1997 sets out when an employee can deduct a work expense under section 8-1 of the ITAA 1997.

Paragraphs 16, 22, 23 and 33 of TR 2020/1 state:

16. For expenses incurred by employees, the fundamental question is whether an expense is incurred in the course of earning employment income. This involves considering the proper scope of the particular taxpayer's work activities to determine if the circumstances of the expense have a sufficiently close connection to earning the employment income.

...

22. The requirement that expenses be incurred in the course of producing assessable income means that it is not enough to show only that there is some general link or causal connection between expenditure and the production of income. The expenditure must have a sufficiently close connection to performance of the employment duties and activities through which the employee earns income.

23. Accordingly, in some cases, expenditure would be regarded as too remote from the income-earning activities or incurred only as a prerequisite to earning income, and not incurred in the course of producing that income.

...

33. By contrast, the encouragement of an employer will not make expenses of self-education deductible if they are not incurred in the course of producing assessable income but, rather, are associated with obtaining new qualifications to commence a new income-earning activity.

Taxation Ruling TR 2024/3 Income tax: deductibility of self-education expenses incurred by an individual discusses the circumstances under which self-education expenses are allowable as a deduction.

Paragraphs 16, 19, and 28 of the TR 2024/3 state:

16. It is not enough to show only that there is some perceived connection, general link or causal connection between the expenditure and the production of your income. The expenditure must have a close connection to the performance of the duties and activities through which you earn your income.

...

19. Having the support or encouragement of your employer to undertake the self-education also is not, by itself, determinative of whether the expense is deductible.

...

28. Courts and tribunals have found the following when considering whether self-education expenses were incurred to maintain or improve knowledge or skills:

•                If the self-education is too general in terms of your current income-earning activities, the necessary connection between the self-education expense and the income-earning activity does not exist. This is often the outcome for the cost of self-improvement or personal development courses because the knowledge and skills obtained is too general.

•                Self-education that results in you being better equipped to perform your current income-earning activities is deductible where the self-education has the requisite connection to your income-earning activities at the time.

•                Obtaining a higher degree of qualification within your profession or industry is deductible where the self-education has the requisite connection to your income-earning activities at the time.

•                Expenditure on an overseas study tour or trip has been found to be deductible in limited circumstances where the study tour or trip had the requisite connection to the income-earning activities at the time. Notable factors to demonstrate such a connection are

°                devoting all of your time while overseas to the advancement of your knowledge relevant to your work

°                the tour or trip is undertaken while you are employed in the relevant role

°                the tour or trip was not recreational or general in nature, but rather showed a particular special circumstance to differentiate it from mere recreational satisfaction

-                the tour or trip was requested or supported by your employer.

The decisions of the Administrative Appeals Tribunal (AAT) in Ting v. FC of T [2015] AATA 166 (Ting) and Assefa v. FC of T [2009] AATA 2 (Assefa) demonstrate that the fact that a course may be of some assistance to a taxpayer in their current employment does not necessarily mean that the course has a close enough connection to their employment for the course expenses to be deductible.

In Ting the AAT held that a postgraduate management course which included an accounting subject was not sufficiently connected to the taxpayer's employment as a high school teacher of maths and science. The AAT member stated:

Given its nature, the course did not improve or maintain the applicant's skills and knowledge as a teacher (cf. Finn); rather, it had the more general effect of increasing the likelihood of him being a better teacher, but that connection is too tenuous to make the course expenses deductible (Hatchett at 499) (emphasis added)

In Assefa, the taxpayer was employed as an assistant in nursing and a carer while studying a Bachelor of Nursing degree. The AAT held that no deduction was allowable for the self-education expenses. It was determined that there was a significant difference between the position of enrolled nurse and registered nurse on one hand, and personal care assistant/nursing assistant on the other. The taxpayer was not considered to be incurring the expenditure in gaining or producing her assessable income as a personal care assistant/nursing assistant as the course was designed to enable the participating student to commence a new income-earning activity as a registered nurse.

Similarly, a nurse studying a Bachelor of Medicine would not be entitled to a deduction for any expenses in relation to the course of study. Although the medical degree would assist them in their current income-earning activity as a nurse, and perhaps even make them a better nurse, the course is designed to prepare a person to be able to commence a new income earning activity as a doctor. The outcome would be the same even if the nurse's employer provided them a letter confirming that studying the medical degree would assist them as a nurse.

Application to your circumstances

To determine whether circumstances exist that support your self-education expenses being deductible, it is necessary to determine whether there is a sufficient connection between you incurring your expenses, and your income earning activities. Whether such a connection exists is a question of fact and is to be determined by reference to all the facts in your case.

Although the knowledge gained from the course on educational research may be of some assistance to you in your current occupation as a secondary teacher and student mentor, we do not consider that objectively, there is a sufficient connection between the course and your current income producing activities. A general link can be made, but the subject of the course, being research into education does not form an integral part of your core responsibilities as a secondary teacher and student mentor. Therefore, you are not entitled to a deduction for self-education expenses as there is not a sufficient link between completing this course and your current employment.

It is also noted that you have committed to this course and its substantial costs but have yet to ask your employer whether you will be allowed leave without pay during the period you will undertake the studies. You have also advised that if you are not granted leave without pay, you will resign from your employment and still undertake the course. This is consistent with our view that the course is not sufficiently connected to your current employment.

We acknowledge that your employer provided you with a letter of support. However, as stated in TR 2020/1 and TR 2024/3, employer support is not determinative of the expenses of a course being deductible. All the facts and circumstances must be examined objectively to determine whether there is a sufficient connection between the course and your employment. As stated previously, viewed objectively the course which is aimed at providing the participant with the knowledge and skills to be a researcher in the field of education, is not considered to be sufficiently connected to your employment as a secondary school teacher

Note that even if the course was considered to be sufficiently connected to your current employment, a deduction would not be allowed for the cost of your airfares, accommodation and meals as you would be considered to be living at the location of your studies given the length of time you will be there and will be accompanied by your spouse (see paragraphs 125, 128 - 132, 144 and 145 of TR 2024/3).

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