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Edited version of your written advice
Authorisation Number: 1012880643263
Date of advice: 18 September 2015
Ruling
Subject: Work related self-education expenses
Question 1
Are you able to claim a deduction for self-education expenses incurred in studying for a medical degree after completing a Bachelor of Pharmacy degree?
Answer
No
This ruling applies for the following periods:
Years ended 30 June 20XX to 2016
The scheme commenced on:
The scheme has commenced
Relevant facts and circumstances
You completed a Bachelor of Pharmacy degree in 200X and have worked as pharmacist since that time. You are registered as a pharmacist under the Australian Health Practitioners Regulation Agency.
You state that your duties as a pharmacist involve providing primary health care, advice and treatment of patients with illness, ailments and disease.
You commenced studying for a Bachelor of Medicine degree at university in 20XX and intend to finish the course in 20YY.
Your stated intention for undertaking the medical degree was to maintain and advance your knowledge in the medical field so that you are able to provide a better service in treating and advising patients through the course of your employment as a pharmacist.
Relevant legislative provisions
Income Tax Assessment Act 1997 - Section 8-1
Reasons for decision
The decision of the High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541 establishes the principle that no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to get employment or to obtain new employment. Such expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.
The Federal Court in FC of T v. M I Roberts 92 ATC 4787; (1992) 24 ATR 479 applied the principle in Maddalena when it overturned an Administrative Appeal Tribunal (AAT) decision allowing a mine manager a deduction for expenses associated with a Master of Business Administration degree. The mine manager was retrenched by his employer in Australia and then undertook an MBA course in the US for two years. On his return to Australia, he was re-employed as a mine manager by another company at a significantly increased salary when compared with his previous position.
We believe that Maddalena also supports our view that 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. In Case Z1 92 ATC 101; AAT Case 7541 (1991) 22 ATR 3549, a public service clerk studying for a law degree later obtained a legal officer position in the public service. Such expenses of self-education were incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.
In your case you qualified as a pharmacist in 200X and have worked in that profession since that time. You commenced studying for a degree in medicine in 20XX.
In a World Medical Assembly statement on the relationship between physicians and pharmacists the following points were considered relevant to your circumstances:
• In a medical practice the physician's responsibilities include the diagnosis of diseases, assessing the need for pharmacological treatment and prescribing the corresponding medicines in consultation with patients, pharmacists and other health care professionals when appropriate. This includes providing information to patients about the diagnosis, indications and treatment goals as well as action, benefits, risks and potential side effects of pharmacological treatment.
• The pharmacist's responsibilities include providing information to patients on the medicines prescribed by the physician such as the name of the medicine, its purpose, potential interactions and side effects, as well as correct usage and storage. Any concerns the pharmacist may have about prescribed medicines should be discussed with the prescribing physician but the pharmacist should not change the prescription without consulting the prescriber.
• The pharmacist should also advise patients, when appropriate, on the selection and use of non-prescription medicines and the patient's management of minor symptoms or ailments. Where self-medication is not appropriate, the pharmacist should advise patients to consult a physician for diagnosis and treatment.
In this light it is considered that by commencing the degree in medicine you have opened up a new income earning activity for yourself rather than maintaining or improving your skills as a pharmacist. The roles of a pharmacist and a physician, while complementary, are not connected as it cannot be said that obtaining a medical degree has any relevant connection to your current occupation as a pharmacist.
The medical degree you are currently studying for is considered to be a new income earning activity and the costs of your study are therefore incurred at a point too soon to be deductible against your current earnings as a pharmacist.