Edited version of your written advice

Authorisation Number: 1013060257386

Date of advice: 2 August 2016

Ruling

Subject: Self-education expenses

Question 1

Are you entitled to claim work-related self-education expenses in the relevant financial year?

Answer

No

This ruling applies for the following periods:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are employed as a care co-ordinator for a disability and aged care service provider. Your key duties in this role are to co-ordinate the delivery of care to clients, ensure compliance with standards, regulatory requirements and procedures, assisting the senior co-ordinator build and maintain positive long term relationships with support workers, maintain the support worker and client database and payroll, and participate in individual carer professional development planning.

You subsequently commenced a Graduate Diploma in a professional medical field. The subjects contained in the course of education include Introduction to Counselling Psychology, Psychological Assessment and Behaviour Change Interventions to Practitioners.

You have incurred self-education expenses in respect of your course of education.

You employer has indicated they may create a role for you to perform functional assessments of clients once you have completed your course of education. You would eventually like to become a clinical medical professional.

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 a loss or outgoing which is incurred in gaining or producing assessable income but not for a loss or outgoing which is of a capital, private or domestic nature.

Taxation Ruling TR 98/9 provides the Commissioners view on the circumstances under which self-education expenses are an allowable deduction under section 8-1 of the ITAA 1997.

Paragraphs 12 to 15 of TR 98/9 provide:

• Self-education expenses are an allowable deduction if they have a relevant connection to the taxpayer's current income earning activities.  

• Self-education expenses are an allowable deduction if:

- the self-education enables the taxpayer to maintain or improve the skills or knowledge they exercise in their current income earning activities; or

- the self-education objectively leads to, or is likely to lead to, an increase in the taxpayer's income from their current income earning activities in the future.

• Unless one or both of the above tests are satisfied, self-education expenses are not an allowable deduction if the self-education is designed to enable the taxpayer to get employment, to obtain new employment or to open up a new income earning activity, whether in business or in the taxpayers current employment. This is because the expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.  

The term 'current income earning activities' in TR 98/9 refers to the income earning activities the taxpayer was performing while undertaking the course of self-education. 

Applying the above to your circumstances 

It is considered that the skills and knowledge you are gaining as a result of undertaking the Graduate Diploma have little relevance to the skills and knowledge you require to perform your employment duties. 

The Graduate Diploma is providing you with new skills and knowledge, that is, skills and knowledge you do not require to perform your employment duties. The subjects you are studying in your course of education are not considered to be relevant to your current employment as a care co-ordinator. Your major duty as a care co-ordinator is the allocation of shifts to support workers, as well as maintaining rosters, filling vacancies, ensuring accuracy in timesheets and billing, identifying and co-ordinating training, and dealing with human resource issues. Your current employment does not involve any interaction with the patients themselves, only the allocation of workers to those patients. The course of education is being undertaken predominantly with the view of obtaining employment in a new role.

Hence, your undertaking of the above course of education does not enable you to maintain or improve the skills and knowledge you require to perform your employment duties and is unlikely to lead to an increase in your salary from your current employment. It is more likely that completion of your course of education will lead to a completely new role with very different responsibilities and duties.

Therefore, it is considered that the self-education expenses you incurred in undertaking your course of education are not allowable under section 8-1 of the ITAA 1997.