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Edited version of your private ruling
Authorisation Number: 1012474752046
Ruling
Subject: Self-education expenses
Question
Are you entitled to a deduction for self-education expenses in relation to course fees and airfares?
Answer:
Yes.
Question 2
Are you entitled to a deduction for the decline in value of a computer used solely for self-education purposes?
Answer:
Yes.
This ruling applies for the following period
Year ended 30 June 2013
The scheme commenced on
1 July 2012
Relevant facts
You are currently completing a degree.
The degree is directly related to your employment.
You are employed full time.
You undertook a subject overseas.
You undertook this subject during the summer semester.
You took annual leave whilst undertaking this subject.
You incurred the costs of undertaking this subject.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
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) 106CLR60, (1961) 12 ATD 348; (1961) 8 AITR 406).
Similarly, if the study 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, it is accepted that the course of study will enhance your knowledge and skills in your current employment activities. Your self-education expenses are considered to have sufficient relevant connection to your income-earning activities you are entitled to a deduction under section 8-1 of the ITAA 1997 for eligible self education expenses.
The purchase of your computer is a capital expense and is not deductible outright. However, you are entitled to claim depreciation for the decline in value.
Note
The self-education expenses you can deduct may be subject to a reduction of up to $250 in accordance with section 82A of the Income Tax Assessment Act 1936. An explanation on how this provision operates is provided at paragraphs 119 to 155 of TR98/9, which can be accessed on our internet website at www.ato.gov.au.