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Ruling
Subject: Self education expenses
Question
Are you entitled to a deduction for the self education expenses you incur for a post-graduate qualification?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2010
Year ended 30 June 2011
The scheme commences on:
During 2009
Relevant facts and circumstances
You are employed through a job agency in a specific position for a company, where you work full-time.
The minimum education requires for this position is the reading, writing and maths skills comparable to those obtained at a high school level or equivalent.
You began studying for a post-graduate qualification. You have recently completed this course.
You incurred expenses related to the study.
You have stated that your post-graduate qualification has given you a better understanding of work practices in your current role and enables you to maintain and improve your skills and knowledge.
Since finishing your course, the company is considering employing you on a permanent basis.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Summary
You are not entitled to a deduction for the expenses you incur in undertaking a post-graduate qualification as there is no sufficient connection to your income-earning activities.
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 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).
Self education expenses are also allowable as a deduction if the study 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.
However, no deduction is allowable for self education expenses 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. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.
Application to your case
In order for your study expenses to be allowed as a deduction, there must be a sufficient connection between your study and your current income earning activities.
While some subjects of your study assist you to understand aspects of your job; the minimum education listed on the job profile does not require tertiary education or specific in order for you to perform your duties.
Although your study will enable you to better understand your work practices, it does not have a sufficient connection to your role. The subjects you have studied are too general in comparison to your current job duties.
For this reason, the expenses you will incur to undertake the post-graduate qualification will not be allowable under section 8-1 of the ITAA 1997.