Edited version of private ruling

Authorisation Number: 1011630675052

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Ruling

Subject: self education expenses

Are you entitled to a deduction for expenses incurred in completing your nursing course?

No.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

You are employed as a carer.

You also act in a management capacity.

In order to be formally accepted in this role it is a requirement to undertake a professional course and qualify as a registered nurse.

The course is endorsed by your employer.

Relevant legislative provision

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Self-education expenses generally fall for consideration under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). This section allows a deduction for losses and outgoings which are incurred in the course of gaining or producing assessable income, unless the losses or outgoings are of a capital, private or domestic nature.

The Commissioner's view on the deductibility of self education expenses is contained in Taxation Ruling TR 98/9. In accordance with paragraphs 13 and 14 of TR 98/9, expenses of self-education will satisfy the requirements of section 8-1 of the ITAA 1997 if:

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

· the study of a course of self education objectively leads to, or is likely to lead to, an increase in a taxpayer's income from their current income earning activity in the future.

Therefore, provided there is sufficient connection between your course of self education and your current income earning activities, you are entitled to claim a deduction for your self education expenses.

However, as stated in paragraph 15 of TR 98/9, self education expenses will not be deductible if the study is intended to:

· enable you to get employment

· enable you to obtain new employment, or

· to open up a new income-earning activity (whether in business or in your current employment).

In your case, you are currently employed as a carer, and are studying a nursing course with the view to becoming a registered nurse.

In the recent case of Assefa v FC of T [2009] AATA 2, it was considered whether studying a course of education in order to advance to a higher classification of nursing was opening up a new income earning capacity. The taxpayer in this case was employed as an assistant in nursing and a care service employee while studying a Bachelor of Nursing degree.

The Tribunal 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, but was studying towards their initial qualification as a registered nurse.

This decision can be directly applied to your circumstances as you are also studying to become a registered nurse, which is considered a new income earning activity. Therefore, your self education expenses are not deductible under section 8-1 of the ITAA 1997.