Edited version of private advice

Authorisation Number: 1012677096294

Ruling

Subject: Self-education expenses

Question

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

Answer

No.

This ruling applies for the following periods

Year ended 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

Year ending 30 June 2017

The scheme commences on

1 July 2013

Relevant facts and circumstances

You commenced studying a degree at university.

You completed one semester before ceasing your studies.

You then commenced work at you current employment.

You have been provided with some on the job training however this is both limited and fragmented due to time constraints.

You decided to undertake additional study and recommenced a degree.

Your direct team leader supports your study and you have been granted paid study leave.

You have incurred the following costs in undertaking your degree:

• course fees and compulsory university amenity levies

• bus fares for travel between home, university and work

• textbooks

• photocopying

• stationary and computer accessories

• computer repairs

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 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 (FCT v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348).

However, paragraph 12 of TR 98/9 states that no deduction is allowable for self-education expenses if the study is to enable the taxpayer to get employment, obtain new employment or to open up a new income-earning activity (whether in business or the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field or employment in which the taxpayer is not yet engaged.

Several court cases have established general guidelines in determining the deductibility of self-education claims. The decision in FCT v. Maddalena (1971) 2 ATR 541; (1971) 45 ALJR 426; 71 ATC 4161, supports our view that no deduction is allowable for self-education expenses if the study, viewed objectively, is designed to enable a taxpayer to get employment or to obtain new employment. Such expenses would come at a point too soon to be properly regarded as incurred in gaining assessable income.

Application to your circumstances

In your case, the duties you are required to carry out in your role are general in nature relative to the subsequent specialised study that you are undertaking.

It may be argued that you will utilise this more specialised knowledge generally in your current role. However, when viewed objectively, this course is designed to enable you to obtain employment in a new role rather than assist you in performing your current duties. Therefore, you are unable to claim self-education expenses under section 8-1 of the ITAA 1997 because the expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.