Edited version of private ruling

Authorisation Number: 1011630479165

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Ruling

Subject: Self-education expenses

Question 1

Are you entitled to a deduction for self-education expenses incurred while undertaking a Diploma of Sustainable Landscape Design?

Answer: Yes.

This ruling applies for the following period

Year ending 30 June 2011

Year ending 30 June 2012

The scheme commenced on

1 July 2010

Relevant facts

You are a vocational trainer. For the previous few years you were employed as a horticultural trainer for an organisation.

When this employment ceased you commenced casual employment as a horticultural trainer and you advised:

· your duties include training and assessment of units of competency in the areas of horticulture, conservation and land management

· most of this work involves rural and remote training

· you have worked a maximum of 30 hours and a minimum of 10 hours per week

· timetables are developed several weeks in advance after discussing future training needs with your employer.

As a vocational trainer you are required to maintain and update your knowledge, skills and current trends in the horticultural industry.

For this purpose shortly after commencing employment as a horticultural trainer you began a Diploma of Sustainable Landscape Design through a university interstate.

The Course subjects include:

· design a sustainable produce garden

· monitor and manage small business operations

· achieve an efficient and sustainable use of natural resources

· apply water sensitive urban design

· oversee sustainable landscape construction techniques

· design towards sustainable landscape

· recommend plants & cultural practices

· produce computer-aided drawings

· prepare a landscape project design.

You are undertaking the study to increase your skills and knowledge and to increase your employment opportunities. All the training you provide is based in small remote communities where sustainability is a priority.

You study during your own time. Your employers have encouraged you to further your studies but no financial assistance has been provided. Most of your study is online. However you are required to attend lectures at the interstate university a few days every month. The course is not available online or externally in your state.

You have incurred the following expenses:

· enrolment fees

· textbooks, stationery

· airfares, taxis

· accommodation.

You have the required documentation to substantiate your claim.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income or are necessarily incurred in carrying on a business for the purpose of 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, or a provision of the ITAA 1997 prevents it.

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.

In your case, it is accepted that the Diploma of Sustainable Landscape Design will maintain or enhance the skills that are required in the performance of your current duties as a horticultural trainer.

The day-to-day cost incurred relating to accommodation and meals is generally a private, non-claimable expense. You may claim the cost of accommodation and meals only when:

· you are participating in work-related study, and

· you are required to be temporarily away from home for one or more nights.

· Your travel expenses - self-education purposes

· When you use a car or public transport, you can claim the cost of travelling from your:

· home to your place of education and back, and

· work to your place of education and back.

The following costs you incurred for the Diploma of Sustainable Landscape Design are considered self-education expenses and are allowable as deductions under section 8-1 of the ITAA 1997:

· course fees

· cost of travel between home and the university including airfares and taxi fares

· accommodation and meals while interstate to attend the university only when participating in your course requires you to be away from home for one or more nights

· stationery and textbooks.

You should keep the necessary substantiation of your expenses in relation to any deduction claimed under section 8-1 of the ITAA 1997.

Please note that the self-education expenses you can deduct may be subject to a reduction of up to $250 in accordance with section 82A of the Income Tax Assessment Act 1936. An explanation on how this provision operates is provided at paragraphs 119 to 155 of TR 98/9, which can be accessed on the ATO website at www.ato.gov.au.