Edited version of your written advice

Authorisation Number: 1012915220967

Date of advice: 23 November 2015

Ruling

Subject: Self education expenses

Question 1

Does a post graduate course of study have the necessary connection with the production of your assessable income so as to entitle you to a deduction for self-education expenses?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 2014.

The scheme commenced on:

1 July 2013

Relevant facts and circumstances

You are a qualified professional and were employed during the year ended 30 June 20XX.

Your duties consisted of a management and supervision role which involved the implementation of various strategies and enabling people on site to implement change.

To improve your chances of promotion and higher salary you undertook a course of post graduate study. This course was stated to be directly related to your work role in that it would enable you to develop the skills and capabilities to implement, not only system improvements and changes, but to achieve behavioural change through coaching.

You discussed with your manager the potential for a salary increase due to changes occurring in the organisation, a shift in focus of your role and the course of study you were planning to undertake. Your manager agreed that the course would improve your chances of promotion. It was also broadly agreed by your colleagues and peers that a degree focussed on leading, managing and developing people would be seen as beneficial and would improve your prospects for promotion and/or a wage increase.

You paid the course fees in instalments during the income year.

You later resigned from your employment, the reason for which you have attributed to changes in your work schedule that were prompted by a significant downturn in commodity prices. This led to workforce leadership and development of people becoming a lower priority for your employer. As a result you have stated that the post graduate studies you undertook, ultimately, did not lead to a promotion or an increase in remuneration.

You have advised that the course of study undertaken was not required in order for you to obtain your new employment.

Relevant legislative provisions

Income Tax Assessment Act 1997 - section 8-1

Reasons for decision

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 explains how this provision applies to self-education expenses. Paragraph 13 of TR 98/9 states:  

If a taxpayer's income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction.

In your case, it is accepted that the post-graduate course of study undertaken by you was intended to maintain or enhance the skills that were required in carrying out your duties as an employee. The fact that the course of study did not in fact lead to a promotion with a corresponding increase in your salary is immaterial as it was your intention, understanding and belief that you would benefit in a material way from the course.

As a consequence the self-education expenses incurred in undertaking the course have the necessary and relevant connection with the earning of your assessable income and are therefore deductible under section 8-1 of the ITAA 1997.