Edited version of your written advice

Authorisation Number: 1012695038001

Ruling

Subject: Self-education expenses

Question 1

Are expenses incurred in undertaking lessons to improve your presentation skill and reduce your accent deductible?

Answer

No

This ruling applies for the following period(s)

Income year ended 30 June 2015

The scheme commences on

1 July 2014

Relevant facts and circumstances

You are a foreign national.

You are applying for permanent residency and intend to live in Australia for good.

You have been in Australia for X years.

You studied and graduated from an Australian university, majoring in a field.

You are currently working for a project based company as an accountant. The company will not be trading after the project ends in 20XX.

You are required to meet with client and discuss important issues in English.

You are not a confident English speaker and believe that this has adversely affected your career.

You are going to attend a one hour per week training session on presentation skills and reduction of accent.

You believe you are well equipped with professional knowledge and experience and that the above training will provide more benefit than professional skills.

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.

Taxation Ruling TR 98/9 states that self-education expenses are allowable as a deduction if your current income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of the self-education enables you to maintain or improve that skill or knowledge.

If the study of a subject of self-education objectively leads to, or is likely to lead to, an increase in your income from your current income-earning activities in the future, the self-education expenses are an allowable deduction.

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. 

To determine whether circumstances exist which would support a deduction for your study course, the essential character of the expenditure must be considered. It is necessary to determine whether there is a sufficient nexus between the expenditure and your current income-earning activities.

TR 98/9 also states:

If a course of study is too general in terms of the taxpayer's current income-earning activities, the necessary connection between the self-education expense and the income-earning activity does not exist. The cost of self-improvement or personal development courses is generally not allowable, although a deduction may be allowed in certain circumstances. In Case Z42 92 ATC 381; AAT Case 8419 (1992) 24 ATR 1183, a senior newspaper journalist, whose duties involved interviewing people for feature articles and making presentations to potential advertisers, was allowed a deduction for the cost of a speech course because it was incurred in maintaining or increasing his ability in his current employment and therefore was necessarily incurred in carrying on that employment.

Example: Brianna, a company director, was having difficulty coping with work due to stress brought about by difficulties with her family situation. She decided to attend a four-week course in stress management to help her deal with the situation. Brianna attended the course after hours and paid for it herself.

The cost of the course is not allowable because the course was not designed to maintain or increase the skill or specific knowledge required in her current position. The expenses are more correctly characterised as related to a private matter.

While it is accepted that as an accountant you will have to meet with clients and discuss their affairs in English, it is considered that this is distinguishable from the case of the journalist in Case Z42 who had to conduct interviews and sales pitches. We consider your situation is more on point with the example provided above. Whilst the course may be beneficial from a personal development point of view it is not designed to maintain or increase the specific skills and knowledge required in your position as an accountant.

The course is considered to be too general and consequently the expenses are not regarded as being incurred in gaining or producing assessable income. Therefore, a deduction is not allowed under section 8-1 of the ITAA 1997.