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Edited version of private ruling
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Ruling
Subject: Self education
Question
Are you entitled to a deduction for self education expenses?
Answer
No.
This ruling applies for the following periods
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
The scheme commenced on
1 July 2008
Relevant facts
You came to Australia to undertake a nursing degree.
While undertaking your study, you worked as an assistant nurse (AN).
You were not allowed to perform duties above your station as an AN (such as giving injections and medications).
After completing your study, you registered with the Nursing Board and obtained a job as a Registered Nurse (RN).
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, and
· the study of a subject of self education objectively leads to, or is likely to lead to, an increase in a taxpayers 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].
Based on the Australian Standard Classification of Occupations descriptions, there is a significant difference between the position of RN, on the one hand, and AN on the other hand. In addition to the requirement of registration or licensing, the RNs have entrusted to them a range of activities that could not be undertaken by the AN. At its simplest level, the RN's are nurses, AN's are not.
A person does not need to have a degree in Nursing, or to be studying for such a degree, to be employed as an AN.
Although, an AN and a RN would primarily perform different duties, we do recognise that some duties may overlap on occasions. However, as discussed above, a RN would perform duties of a more specialised nature based on the additional education and training they have received.
Self education courses are generally undertaken to further yourself in a position that you already hold. In your case, you came to Australia to undertake your nursing degree. You then worked as a AN while you were undertaking the course.
The cost of undertaking the training is incurred to gain a nursing qualification. That is, to get new employment as a registered nurse.
The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. Therefore, you are not able to claim a deduction for self education expenses under section 8-1 of the ITAA 1997.