Edited version of your private ruling

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Ruling

Subject: Self education

Question:

Are you entitled to a deduction for self education?

Answer:

No.

This ruling applies for the following periods

Year ended 30 June 2010

Year ended 30 June 2011

The scheme commenced on

1 July 2009

Relevant facts

The arrangement that is the subject of the private ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are: 

· the application for private ruling;

· emails providing details of the course studied and copies of certificates.

· You are a registered nurse (RN).

· You are undertaking a specialised degree.

· You paid fees for the course in late 2009 and began the course in early 2011.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Self education expenses generally fall for consideration under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997).  This section allows a deduction for losses and outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent to which they are capital, private or domestic in nature.

To be deductible under this section an expense must have the essential character of an expense incurred in gaining or producing assessable income or, in other words, of an income-producing nature.

The Commissioner's view on the deductibility of self education expenses is contained in Taxation Ruling TR 98/9. In accordance with TR 98/9, expenses of self education are allowable if:

· a taxpayers income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of self education enables the taxpayer to maintain or improve that skill or knowledge, and

· the study of a subject of self education objectively leads to, or is likely to lead to, an increase in a taxpayers income from his or her current income-earning activities in the future.

Costs of self education are not deductible 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. In such situations the expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income [see Federal Commissioner of Taxation v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161].

You are a RN. Whilst the degree has application in the medical field, it is not considered that it is sufficiently connected to the duties of a RN and the specialised knowledge is well above that which you require to fulfil your employment duties.

Although you may gain some knowledge and skills from the subjects studied that could be of some assistance in your work it is considered that there is an insufficient nexus between the course of education and your current income earning activities and that the predominant focus of the course is to provide the skills required by a specialised person in the medical field.

As there is an insufficient nexus between the course of self education and your current income earning activities, the self education expenses associated with the course are not incurred in earning your assessable income. Consequently you are not entitled to a deduction for the expenses under section 8-1 of the ITAA 1997.