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Ruling

Subject: Self-education

Question

Are you entitled to claim a deduction for self-education expenses?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 2012

The scheme commences on:

1 July 2011

Relevant facts and circumstances

Your current employment duties include managing project work.

The position description of this role includes as a desirable qualification, post-graduate qualifications in management/administration/business management. The description indicates that candidates can be working towards this qualification.

Accordingly you are completing a postgraduate management related course part-time.

Your course is supported by your employer.

You are granted study leave during the university semester.

In addition, you are granted extra study leave for examinations.

You have incurred expenses for course fees, textbooks, stationery, computer costs and communication costs.

The course was undertaken to upgrade your qualifications for your current employment.

The course fees are not paid through HECS HELP.

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.

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.

In your case, your employment role includes project management responsibilities. It is accepted that the postgraduate course you are undertaking will enhance the skills required in the performance of your duties. Consequently, the self-education expenses incurred have the necessary and relevant connection with the earning of your assessable income.

You are therefore entitled to a deduction under section 8-1 of the ITAA 1997 for self-education expenses.

Limit to the deductibility of self-education expenses

In certain circumstances you may have to reduce your allowable self-education expenses by $250 in accordance with section 82A of the Income Tax Assessment Act 1936. However you may have other types of expenses some of which are not allowable as a deduction that can be offset against the $250 before you reduce the amount you can claim for allowable expenses. Further information on how to work out your self-education expenses is provided at pages 38 to 40 of TaxPack 2011 and paragraphs 119 to 155 of TR 98/9. This publication and ruling are available on the Tax Office website: www.ato.gov.au