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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 period
Year ending 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts
You are employed in roles which require a lot of verbal communication.
English is not your first language and you also suffer from a speech impediment.
You are attending a course that is assisting you with your pronunciation, accent and speech impediment.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Summary
Your study is too general in terms of your current income-earning activities. Therefore, the necessary connection between the self-education expenses and your income-earning activities does not exist. Accordingly, a deduction is not allowable for these expenses.
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.
Taxation Ruling TR 98/9 states that self-education expenses are allowable as a deduction if your current income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of the self-education enables you to maintain or improve that skill or knowledge.
If the study of a subject of self-education objectively leads to, or is likely to lead to, an increase in your income from your current income-earning activities in the future, the self-education expenses are an allowable deduction.
However, no deduction is allowable for self-education expenses 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. Such expenses of self-education are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.
To determine whether circumstances exist which would support a deduction for your study course, the essential character of the expenditure must be considered. It is necessary to determine whether there is a sufficient nexus between the expenditure and your current income-earning activities.
TR 98/9 also states:
If a course of study is too general in terms of the taxpayer's current income-earning activities, the necessary connection between the self-education expense and the income-earning activity does not exist…
Example: Brianna, a company director, was having difficulty coping with work due to stress brought about by difficulties with her family situation. She decided to attend a four-week course in stress management to help her deal with the situation. Brianna attended the course after hours and paid for it herself.
The cost of the course is not allowable because the course was not designed to maintain or increase the skill or specific knowledge required in her current position. The expenses are more correctly characterised as related to a private matter.
In your case there is not a sufficient nexus between the expenditure and your income earning activities. Whilst the course may be beneficial from a personal development point of view it is not designed to maintain or increase the specific skills and knowledge required in your employment positions.
The course is considered to be too general and consequently the expenses are not regarded as being incurred in gaining or producing assessable income. Therefore, a deduction is not allowed under section 8-1 of the ITAA 1997.