Edited version of your private ruling

Authorisation Number: 1012604845929

Ruling

Subject: Self-education expenses

Question

Are you entitled to a deduction for self-education expenses you incurred in undertaking a course?

Answer

Yes

This ruling applies for the following periods:

Year ended 30 June 2012

Year ended 30 June 2013

The scheme commences on

1 July 2011

Relevant facts and circumstances

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 dated March 2014,and

• the documents provided in response to the requests for further information.

You are employed as a Manager for a Government Department.

You are responsible for a specific region.

Your role responsibilities include, but are not limited to the following:

• Managing a section in a team in a range of incident management environments.

• Set up, manage and monitor performance of the section, adjusting structure as required.

• Delegate tasks, brief, debrief and manage staff, monitor workloads and progress.

• Identify, analyse and monitor current and predicted impacts and monitor effectiveness of risk mitigation strategies in meeting strategic control priorities

• Prepare and maintain maps to assist control of the incident and for communication of incident status.

Skills and attributes required for the Manager role include, but are not limited to the following:

• High level communication skills, understanding of the stakeholder, Government, other agency and community needs and issues

• Ability to read maps and prepare basic operational communication maps

You are also employed in another position part of your role with the department.

You have completed a course.

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 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 taxpayers 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).

In FC of T v. Studdert 91 ATC 5006; (1991) 22 ATR 762 (Studdert's Case), the taxpayer, a flight engineer, sought a deduction for expenses incurred on light aircraft flying lessons leading to a private pilot's licence. The Administrative Appeals Tribunal (AAT) (91 ATC 2007; (1991) 22 ATR 3042) at first instance was prepared to accept that it was part of Mr Studdert's duties to understand the overall workings of aircraft flight. The AAT allowed the expenditure on the basis that the lessons improved his proficiency in those duties. It also found that Mr Studdert rightly believed that possession of the pilot's licence would assist him in promotion to higher grades as an engineer, although the AAT did not consider it necessary to base its decision on this finding.

On appeal to the Federal Court, Hill J substantially agreed with the decision of the AAT. His Honour found that the expenses were relevant and incidental to the activities as flight engineer that directly produced Mr Studdert's income. This finding was based on the facts that undertaking the lessons made him better equipped to perform his skilled job and better proficiency was a motivation for undertaking the lessons. If necessary, his Honour would also have supported his decision with the finding that flying proficiency would assist Mr Studdert in promotion to higher grades in his current job (91 ATC 5006 at 5015-5016; (1991) 22 ATR 762 at 772).

In your case you completed a course with the intention to improve your skills and knowledge relating to your employment. As a manager you are not required to undertake specific activities however you are expected to liaise and coordinate with staff that complete these activities to ensure effective procedures are completed.

Your case is very similar to Studdert's case as it can be argued that in your role it is as part of your duties to understand the overall workings of the region. It is considered that a sufficient nexus exists between your current employment duties and the course you are undertaking. Therefore, you are entitled to a deduction under section 8-1 of the ITAA 97 for self-education expenses.