Edited version of private ruling

Authorisation Number: 1011633693974

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Ruling

Subject: Self education

Are you entitled to a deduction for self education expenses?

Yes.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

You are a full time trades person.

You enrolled in a Certificate II in a relevant field.

This course provides the practical skills and knowledge to develop, select and commission assemblies, apparatus and systems. Additionally skills to diagnose faults and malfunctions and plan and initiate approaches to problems are also a focus of the course.

The course enabled you to better perform your duties by enhancing your skill set, adding valuable knowledge in the environment you see and work in every day. Given the nature of the industry, the there is a need for appropriately skilled people which is integral in continuing your career as a trades person.

You live and work in the rural area and travel to the city in order to complete yourstudies. Depending on the TAFE timetable, study most often occurs from Monday to Wednesday. This involves a significant amount of travel. You do not maintain a residence in the city. However, whilst in the city, your parents provide you with accommodation.

You incur the following expenses:

· airplane flights between your home and the city

· TAFE Course Fees

· text books and other study material

· parking costs (at the TAFE campus)

· motor vehicle costs for travel between your accommodation and the TAFE campus.

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 except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.

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; (1961) 8 AITR 406).

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.

The following types of expenses related to self education are allowable:

· course or tuition fees

· text books and other study material

· airfares incurred for attending an educational institution

· expenses for your travel in either direction between your home or workplace and the place of education

· parking at the place of education

· where you are away from home overnight, accommodation and meals expenses incurred on attending an educational institution, and

· internet expenses.

In your case, it is accepted that the study will maintain or enhance the skills that are required in the performance of your current employment duties. Consequently, the self education expenses incurred have the necessary and relevant connection with the earning of your assessable income and are therefore deductible under section 8-1 of the ITAA 1997. Therefore, you are entitled to a deduction for course fees, flights from your home to the city, travel between your accommodation and the TAFE, parking and text books and other study material.

Please note, 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 Australian Taxation Office website at www.ato.gov.au. An explanation of how this provision operates is also provided on pages 37 to 38 of TaxPack 2010.