Edited version of your private ruling

Authorisation Number: 1012515869842

Ruling

Subject: Self-education expenses

Question

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

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

Year ended 30 June 2016

The scheme commences on:

1 July 2012

Relevant facts and circumstances

You are an employee.

You are currently undertaking a degree course

Your role requires you to interpret and apply complex legislation, explain reasons of decisions to the customers and conduct research and provide expert advice on complex matters.

You receive study assistance in the form of study leave and an education allowance.

The financial sponsorship is granted only on consideration of the course in relation to the staff member's training needs.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Summary

You are entitled to a deduction for the self-education expenses you incurred as there is a sufficient connection between your studies and your current employment.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses or outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent that they are outgoings of a capital, private or domestic nature.

Taxation Ruling TR 98/9 discusses the circumstances under which self-education expenses are allowable as a deduction. Self-education expenses are deductible where they have a relevant connection to the taxpayer's current income earning activities.

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; (1961) 8 AITR 406).

Similarly, if the study of a subject 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.

However, no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to open up a new income earning activity, whether in business or in the taxpayer's current employment. Such expenses of self-education are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income (FC of T v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161).

In your case, it is accepted that your degree will enhance the skills and knowledge that are required in the performance of your current employment duties.

Consequently, the self-education expenses incurred in undertaking this degree have the necessary and relevant connection with the earning of your assessable income.

The cost of the course fees, student services and amenities fees, textbooks, study material, stationary, travel expenses to and from home/university and parking fees are therefore deductible as self-education expenses under section 8-1 of the ITAA 1997.

Calculating your deduction

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 TR 98/9, which can be accessed on the Tax Office's website at www.ato.gov.au.