Edited version of private ruling

Authorisation Number: 1011700464070

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: self education

Question

Are you entitled to a deduction for self education expenses?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2009

The scheme commenced on

1 July 2008

Relevant facts

You are an overseas qualified nurse.

Your overseas qualifications were not accepted in Australia.

To allow you to work as a registered nurse in Australia, you were required to undertake further study so that you could meet the current Australian nursing education standards and English language proficiency testing for the nursing profession.

You obtained employment soon after arriving in Australia, and were employed on a casual basis as an assistant nurse. You also work casually for a nursing agency.

You undertook and completed your Bachelor of Nursing.

You did not register with the Nursing Board (the Board) on completion of your Bachelor of Nursing as you where unable to meet the English language proficiency criteria at the time.

You undertook and completed a Masters of Nursing and English language proficiency testing during the income year.

At the completion of both courses, you submitted your application for registration as a registered nurse. It was accepted and approved by the Board.

Your position at work has been changed from assistant nurse to registered nurse, since becoming registered with the Board.

Relevant legislative provisions

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 to the extent to which they are incurred in gaining or producing assessable income, except to the extent to which they are capital, private or domestic in nature.

To be deductible under this section an expense must have the essential character of an expense incurred in gaining or producing assessable income or, in other words, of an income-producing expense.

The Commissioner's view on the deductibility of self education expenses is contained in Taxation Ruling TR 98/9. In accordance with TR 98/9, expenses of self education are allowable 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 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.

Costs of self education are not deductible if the study is to enable a taxpayer to get employment, to obtain new employment or to open up a new income-earning activity (whether in business or in the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. In such situations the expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income [see Federal Commissioner of Taxation v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161].

In your case, you gained your qualification as a nurse in an overseas country and practised there before coming to Australia. As your overseas qualifications were not accepted in Australia, you were required to complete further study to be able to meet the criteria for registration with the Board.

As an assistant nurse, although you were required to perform many of the same duties as a registered nurse, you were not required to have a degree in nursing, or to be studying for such a degree to be able to perform the duties relating to that position. The study is not undertaken to maintain or improve your skills and knowledge as an assistant nurse.

The cost of undertaking the study is incurred to gain recognition of your nursing skills and for the purpose of qualifying you to work as a registered nurse in Australia.

The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income as a registered nurse. Therefore, you are not able to claim a deduction for self education expenses under section 8-1 of the ITAA 1997.