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Edited version of your private ruling
Authorisation Number: 1012548358421
Ruling
Subject: Self education
Question
Are you entitled to a deduction for self education expenses?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2013
The scheme commenced on
1 July 2012
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are employed as a X.
You are undertaking a Bachelor of Y.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for a loss or outgoing to the extent that it is incurred in gaining or producing assessable income. However, a loss or outgoing is not deductible if it is of a capital, private or domestic nature, or it is incurred in gaining or producing exempt income.
The Commissioner's view on the deductibility of self education expenses are explained in Taxation Ruling TR 98/9. According to paragraph 13 and 14 self education expenses are allowed if:
· a taxpayer's income earning activities are based on the exercise of a skill or some specific knowledge, and the self education course enables the taxpayer to maintain or improve that skill or knowledge; or,
· 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 their current income earning activity in the future.
Therefore, provided there is a sufficient connection between your self education and current income earning activities, you are entitled to claim a deduction for your self education expenses.
However according to paragraph 15 of TR 98/9, no deduction is allowed for your self education expenses if the study is to:
· enable you to get employment
· enable you to obtain new employment, or
· open up a new income-earning activity (whether in business or in your current employment).
This view is supported by the decision of the High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541, which establishes the principle that no deduction is allowable for self education expenses if the study, viewed objectively, is designed to enable a taxpayer to get employment or obtain new employment. Such expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.
The above principles do not always operate on a mutually exclusive basis. It is always necessary to have regard to the words of section 8-1 of the ITAA 1997 and apply them to the facts (paragraph 16 of TR 98/9).
It is considered that your self education will open up a new field of employment. Therefore, you are not entitled to a deduction for self education expenses.