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Ruling
Subject: Deduction for self education expenses
Question 1
Are you entitled to claim a deduction for the cost of fees for self education?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2012
The scheme commences on:
01 July 2011
Relevant facts and circumstances
You are employed in an information technology (IT) role. You were promoted in late 2011.
Your responsibilities are to manage and support the ongoing review, prioritisation, development and maintenance of IT systems and services for your employer.
You are involved in the general administration of the websites which includes reviewing content, upgrading client access and improving client useability and working with contractors to upgrade website designs.
You have undertaken tertiary study in the IT field.
The cost of the study has included the payment of a tuition fee for each course and you have paid upfront for your current course.
You advise that your current course was undertaken to increase your knowledge and future earning potential in your current role with your employer.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
Income Tax Assessment Act 1997 section 26-20
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 (Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348).
In your case, you are employed in an IT role and you are currently undertaking a course in the IT field.
It is considered that this study will maintain or improve your skills or knowledge in your IT role.
Therefore, you are entitled to a deduction for self-education expenses incurred on the IT course after your appointment to your new role.