Edited version of your written advice

Authorisation Number: 1012875518042

Date of advice: 9 September 2015

Ruling

Subject: WRE - Self education expenses

Question 1

Is the taxpayer entitled to claim a deduction for the training course expense incurred in upgrading their truck driver's license from a Heavy Rigid (HR) to Heavy Combination (HV) to Multi Combination (HC)?

Answer

Yes

Question 2

Is the taxpayer entitled to claim a deduction for the associated costs of the licence upgrade being: medical examination, learner's logbook, knowledge test, records search and change of licence fee?

Answer

No

This ruling applies for the following period(s)

Year ending 30 June 2015

The scheme commences on

1 July 2014

Relevant facts and circumstances

You have been working in the transport industry as a truck driver for a number of years, predominately with X and Y.

You commenced work driving trucks on a casual basis with X in 20XX.

X requested that you upgrade your licence, so they could offer you more work (be more gainfully employed by them).

You also undertook truck driving activities for Y.

You are employed with both X and Y on a casual basis and have remained on their payroll for the entire period.

The truck driving work is seasonal and during one of the quiet periods you commenced study in order to upgrade your truck licence.

You incurred the following expenses in relation to upgrading to license to MC level:

• Training course $ X

• Learner's logbook $ X

• Medical examination $ X

• Knowledge test $ X

• Record search $ X

• Licence change $ X

You completed the licence upgrade in 20XX.

Upon completion of the training course, you recommenced work activities for X, from X 20XX until the remainder of the 20YY financial year.

Reasons for decision

Question 1

Detailed reasoning

Section 8-1 of the 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 (Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348.

In your case, you held an X truck licence and were employed to carry out truck driving activities by two companies on a casual basis. At the time of undertaking study to upgrade your truck licence from X to X to X there was no rostered work shifts for you at either of the companies as it was a quiet period but you were still on the payroll records. Therefore, we consider you to be employed by X and Y during the quiet periods.

The completion of the truck driver training course has clearly resulted in improved efficiency in the performance of your existing duties and increased your income earning capacity. Thus, a clear connection can be found between the cost of the course and the gaining of your income.

Self-education expenses that are allowable under section 8-1 of the ITAA 1997 and relate to a 'prescribed course of education', are limited in deductibility by subsection 82A of the Income Tax Assessment Act 1936 (ITAA 1936) to the net amount of self-education expenses that exceeds $250.

The driving school is considered to be an 'other place of education' for the purposes of section 82A of the ITAA 1936. Accordingly, your claim for the self-education expense allowable to you will have to be reduced by $250.

Question 2

Detailed reasoning

The expenses associated with obtaining a driving licence are not allowable deductions under section 8-1 of the ITAA 1997 because they are a capital or private expense. Expenses associated with obtaining a driving licence include expenses such as examinations, record searches, licence changes and testing fees.

Paragraph 77 of Taxation Ruling TR 95/18 confirms that while the holding of a driver's licence may be a condition of employment, it does not follow that the licence fees are deductible. They are private in nature and accordingly not deductible under section 8-1 of the ITAA 1997. As the cost of the licence is private in nature it follows that any expense associated in obtaining the licence is also considered to be a private expense.

Therefore, you are not entitled to a deduction for the expense incurred in undertaking a test to obtain your HR and HV drivers licence under section 8-1 of the ITAA 1997.

However, the expenses associated with the training course, such as the learner's log book, are deductible under section 8-1 of the ITAA 1997 as there is a connection between the cost of your course and the gaining of your employment.