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Edited version of private ruling

Authorisation Number: 1011625367781

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Ruling

Subject: Self-education expenses

Are the self-education expenses you incurred allowable as a deduction?

No.

This ruling applies for the following period:

1 July 2009 to 30 June 2011

The scheme commences on:

1 July 2009

Relevant facts and circumstances

You were employed part-time at a school assisting a student with learning difficulties.

Your duties include:

    · supervising the student

    · assisting the student to enable them to comply with teacher instructions and to participate in class activities

    · assist other students in the class

    · provide feedback on the learning needs of the students

    · observe the student during play and social interaction and support the child in these areas, and

    · attend meetings with the class teacher, parents, occupational therapists and speech therapists to discuss the child's behaviours and progress, and determine support strategies to be implemented. Both the behaviours of the children and the parents and their interaction would be discussed.

You enrolled in a graduate certificate counselling course (the graduate certificate).

You provided a listing of the subjects studied as part of the graduate certificate.

You believe that the expenses you incur for the graduate certificate should be deductible for the following reasons:

    · you will gain a greater understanding of behaviours both in children and parents and be able to make more knowledgeable observations

    · you will be able to make informed recommendations regarding children's learning abilities and socialisation issues and recommend to parents and teachers strategies to further improve the children's abilities to integrate into a normal learning environment, and

    · it is likely that you will be able to improve your income earning ability and then possibly working as a counsellor within a school.

You incurred expenses for textbooks and course fees in relation to the graduate certificate.

You do not hold any teaching/education qualifications.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Summary

You are not entitled to a deduction for the expenses you incurred for the course of study as there is insufficient nexus between your income earning activities and the course of study.

Detailed reasoning

Self-education expenses generally fall for consideration under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). Section 8-1 allows a deduction for an outgoing to the extent that it is incurred in gaining or producing assessable income, except where the outgoing is of a capital, private or domestic nature.

The general test for deductibility is that there should be a clear connection between the expense and the gaining or producing of assessable income from a profession or employment. Consequently, it is necessary to determine the connection between the particular outgoing and the operations by which the taxpayer more directly gains or produces his or her assessable income (Charles Moore & Co (WA) Pty Ltd v. Federal Commissioner of Taxation (1956) 95 CLR 344; (1956) 11 ATD 147; (1956) 6 AITR 379, Federal Commissioner of Taxation v. Cooper (1991) 29 FCR 177; 91 ATC 4396; (1991) 21 ATR 1616 and Roads and Traffic Authority of New South Wales v. FC of T (1993) 43 FCR 223; 93 ATC 4508; (1993) 26 ATR 76). 

Taxation Ruling TR 98/9 sets out the circumstances in which self-education expenses are allowable as deductions, and states that 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 Ruling states that a deduction is allowable for self-education expenses if:

    · a taxpayers income earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge, or

    · the study leads to, or is likely to lead to, an increase in a taxpayers income from his or her current income earning activities in the future.

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. This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. The expenses come at a point in time too soon to be regarded as being incurred in gaining or producing assessable income. They are incurred in getting, not in doing, the work which produces the income.

Where a course of study is too general in terms of the taxpayer's current income-earning activities, the necessary connection between the self-education expense and the income-earning activity does not exist.

In light of the tests outlined above, what needs to be fully considered is whether the undertaking of the graduate certificate would contribute to the maintenance or enhancement of the skills and knowledge required in your employment.

Your duties are essentially to assist the class teacher with the special needs of a particular student. You also provide assistance to other students in the class, attend meetings and provide feedback to contribute to the learning strategies to be implemented for the student. It is noted that no specific teaching/counselling skills or qualifications were required for your role.

You have provided details of the subjects to be completed for the graduate certificate and given a brief summary of how you believe the course assisted you in your role.

The graduate certificate is a specialised course in counselling and it is not a course relating to providing assistance and support for students with special learning needs, the area in which you were specifically employed.

We acknowledge that some of the subjects studied may have assisted you in your role. However, you did not need any formal qualifications to carry out your work, and any connection between the course of study and your employment is considered too remote. There is little doubt that the graduate certificate is designed to enable individuals to gain qualifications as a counsellor and would assist in developing the skills of people intending to become counsellors. The graduate certificate provides you with knowledge, skills and qualifications over and above those needed to perform your role.

In addition, there is no indication that the graduate certificate would lead to, or likely lead to, an increase in your income from your employment.

It is considered that there is insufficient nexus between your income earning activities and the graduate certificate. As such, the expenses you incurred to undertake the course were not incurred in gaining or producing your assessable income and therefore are not allowable as a deduction under section 8-1 of the ITAA 1997.