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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 2011
The scheme commenced on:
1 July 2010
Relevant facts and circumstances
You were approached by an organisation to undertake a course. The organisation promised that they would employ you upon the successful completion of the course.
You undertook the course and incurred expenses in relation to the course.
At the time of undertaking the course you were unemployed.
You have now completed the course and are working for the organisation.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
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 (FCT v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348).
However, paragraph 12 of TR 98/9 states that no deduction is allowable for self-education expenses if the study is to enable the taxpayer to get employment, obtain new employment or to open up a new income-earning activity (whether in business or the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field or 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.
In your case, when you undertook the course you were unemployed. Completion of the course enabled you to open up a new income earning activity. It is considered that the expenses are incurred at a point to soon to be regarded as incurred in gaining your assessable income. Accordingly, you are not entitled to a deduction for the costs incurred for the course.