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Edited version of private ruling
Authorisation Number: 1011711645692
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Ruling
Subject: Self-education expenses
Question
Are you entitled to a deduction for self-education expenses?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2008
Year ended 30 June 2009
Year ended 30 June 2010
Year ending 30 June 2011
The scheme commences on:
1 July 2007
Relevant facts and circumstances
You completed a Bachelor degree some time ago. You have been working as a pharmacist in a rural area.
A number of years later you commenced a fulltime Medical Degree at a university and hope to complete that degree in the near future.
You plan to continue to work in rural locations as a general practitioner. As there are no pharmacists in some remote locations the general practitioner dispenses prescriptions in these remote areas.
Detailed reasoning
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 circumstances in which self-education expenses are allowable as a deduction under section 8-1 of the ITAA 1997. If a taxpayer's current income earning activities are based on the exercise of a skill or some specific knowledge and the self education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction.
The decision in FC of T v. Maddalena 71 ATC 4161; 2 ATR 541 supports the Commissioner's view that no deduction is allowable if the study is designed to enable a taxpayer to open up a new income earning activity, whether in business or in the taxpayer's current employment. This would include studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged.
You are a pharmacist and it is considered that there is an insufficient connection between the skills and knowledge required in your current duties and the course that you have undertaken.
It is considered that the study is designed to enable you to open up a new income earning activity as a doctor.
As the study is designed to enable you to open up a new income earning activity and there is insufficient nexus between the course of self education and your current income earning activities, the self education expenses associated with the course are not incurred in earning your assessable income. Consequently you are not entitled to a deduction for the expenses under section 8-1 of the ITAA 1997.