Edited version of your private ruling

Authorisation Number: 1012509583748

Ruling

Question

Are you entitled to a deduction for your self-education expenses?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2013

The scheme commences on:

1 July 2012

Relevant facts and circumstances

You were an assistant nurse.

You undertook a course that qualified you to become a registered nurse.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Summary

You are not entitled to a deduction for your self-education expenses as the expenses are incurred to open up a new income earning activity as a registered nurse.

Detailed reasoning

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 which are incurred in the course of gaining or producing assessable income, unless the losses or outgoings are of a capital, private or domestic nature.

The Commissioner's view on the deductibility of self education expenses is contained in Taxation Ruling TR 98/9. In accordance with paragraphs 13 and 14 of TR 98/9, expenses of self-education will satisfy the requirements of section 8-1 of the ITAA 1997 if:

(a) a taxpayer's income earning activities are based on the exercise of a skill or some specific knowledge, and the course of self education enables the taxpayer to maintain or improve that skill or knowledge; or,

(b) the study of a course of self education objectively leads to, or is likely to lead to, an increase in a taxpayer's income from their current income earning activity in the future.

Therefore, provided there is sufficient connection between your course of self education and your current income earning activities, you are entitled to claim a deduction for your self education expenses.

However, as stated in paragraph 15 of TR 98/9, self education expenses will not be deductible if the study is intended to:

1. enable you to get employment,

2. enable you to obtain new employment, or

3. to open up a new income-earning activity (whether in business or in your current employment).

This includes studies relating to a particular profession, occupation or field of employment in which you are not yet engaged. The expense is considered to be incurred at a point too soon to be regarded as incurred in gaining or producing assessable income (FC of T v. Maddalena 71 ATC 4161; 2 ATR 541).

In the recent case of Assefa v FC of T [2009] AATA 2 (Assefa's case), it was considered whether studying a course of education in order to advance to a higher classification of nursing was opening up a new income earning activity. The taxpayer in this case was employed as an assistant in nursing and a care service employee while studying a Bachelor of Nursing degree.

The Administrative Appeals Tribunal held in Assefa's case that no deduction was allowable for the self-education expenses. It was determined that there was a significant difference between the position of enrolled nurse and registered nurse on one hand, and personal care assistant/nursing assistant on the other. The taxpayer was not considered to be incurring the expenditure in gaining or producing her assessable income, but was studying towards their initial qualification as a registered nurse.

This decision can be directly applied to your circumstances as you are also an assistant nurse studying to become a registered nurse, which is considered a new income earning activity.

While we acknowledge that the knowledge gained from the course may have been of some assistance in your occupation as an assistant nurse, the predominant focus of the course is to provide the skills and qualifications to become a registered nurse. The subjects studied provided you with skills and abilities in advance of those you required in your employment as an assistant nurse.

Therefore, your self education expenses are not deductible under section 8-1 of the ITAA 1997.