Edited version of your written advice

Authorisation Number: 1051385358008

Date of advice: 13 June 2018

Ruling

Subject: Work related expenses – self education

Question

Am I entitled to a deduction for course fees of $X and textbook costs of $Y for the unit 1 “International Law” at a local university?

Answer

No

Question

Am I entitled to a deduction for course fees of $X and textbook costs of $Y for the unit 2 “Constitutional Law” at a local university?

Answer

No

Question

Am I entitled to a deduction for course fees of $X and textbook costs of $Y for the unit 3 “Alternate Dispute Resolution” at a local university?

Answer

Yes

Question

Am I entitled to a deduction for course fees of $X and textbook costs of $Y for the unit 4 “Civil Obligations” at a local university?

Answer

Yes

Question

Am I entitled to a deduction for course fees of $X and textbook costs of $Y for the unit 5 “Construction Law” at a local university?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 20YY

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are employed with an Educational Institution.

As part of your duties you are required to undertake scholarly pursuits and obtain new knowledge in order to deliver the Construction Procurement Unit as part of the course. You believe the minimum level of study is a degree course.

You seek to claim a deduction for the costs of several law degree units being –

● 1 - Public International and Human Rights Law

● 2 – Constitutional Law

● 3 – Legal Conflict Resolution

● 4 – Civil Obligations

● 5 – Construction Law

“Public International and Human Rights Law” develops an understanding of the sources, principles and institutions of international law, with specific applications of international human rights law. The course explores fundamental concepts such as the nature and sources of international law and the international legal system, the relationship between international and domestic law, criteria for statehood, state personality, jurisdiction and responsibility, and the use of force. It provides a broad introduction to international human rights law, the law of the sea and international environmental law.

“Constitutional Law” examines the constitutions of Australian governments. Understanding the limits of those powers and the way the various government levels interact is the basis of understanding law making in Australia. The course examines the Commonwealth and State Constitutions, including the division of powers between different levels of government in Australia's federal system, the settlement of disputes between Federal and State Governments over which of them has power to make laws in particular areas, and the role of the High Court in the interpretation of the Constitution. Limits to law making powers are considered. Students are asked to consider to what extent interpretation of the Constitution should evolve as the needs of society change, and to critically reflect on the development of Australian constitutionalism since federation.

“Legal Conflict Resolution” introduces students to communication in a situation of conflict. Students are taught to explore important skills in communication such as listening, interviewing and negotiating. Students will be introduced to the array of possible methods of resolving conflicts, including litigation. Some methods of conflict resolution such as mediation will be considered in detail so students have a sound practical knowledge. The course will give students grounding in the fundamentals of conflict resolution in the Australian legal system.

“Civil Obligations A (Contract and Torts)” concerns aspects of the law of contract which is the basis of all commercial transactions and essential for all facets of professional endeavour. Students will gain a broad theoretical understanding of the basis of the law of contract. The aim of this course is to equip students with knowledge of the legal requirements for contract formation; the capacity of parties to enter into in to contracts; and the required content of a legally enforceable contract.

“Construction Law” allow students to acquire to an intermediate standard analytical and problem-solving skills needed to be able to identify and respond to legal issues they are likely to encounter as industry professionals engaged in building, engineering and infrastructure projects. It will examine the law which forms a core part of construction projects, enabling students to recognise when legal issues are likely to arise and to respond in a timely and effective manner. Problem-based learning, an intentional, inquiry-based teaching approach, will teach both declarative knowledge and functioning skills, with the latter including communication and collaboration skills.

You argue that the abovenamed law units have useful connection to units that you teach being –

● Engineering Practices

● Project Management

“Engineering Practices” helps graduates to communicate with other professionals and the community in a variety of contexts and forms, appreciate working in multidisciplinary teams, be able to gather and process information quickly and efficiently, have clear ethical standards and appreciate the issues that affect the profession and the community. This course provides students with an understanding and application of professional engineering practices within a Civil Engineering workplace environment.

“Project Management” provides students with an understanding and application of the attributes required in the planning, management, organisation and administration of civil and structural engineering projects. Particular emphasis is placed on the successful delivery of projects in accordance with the knowledge areas within the Project Management Body of Knowledge (PMBOK).

Both units have sections relating to anti-discrimination, contract terms and project management.

You are also scheduled to teach the units –

● Construction Project Management and

● Construction Procurement.

You have agreed that the Australian Taxation Office may seek outside information relevant to this application – specifically information regarding the individual units as set out above at your local university from the university’s website. Details of these units was accessed and reviewed for connection(s) to your current duties.

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, or relate to the earning of exempt income.

Taxation Ruling Taxation Ruling 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business 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).

Further, paragraph 26 of TR 98/9 states that expenses relating to self-education which are compulsory and unavoidable, as well as those for which a need can be shown in terms of fulfilling the requirements of the course, are regarded as being 'necessarily incurred' and are expenses of self-education.

Paragraphs 33 and 34 of TR 98/9 are particularly relevant –

33. The High Court of Australia has indicated that the expenditure must have the essential character of an outgoing incurred in gaining assessable income or, in other words, of an income-producing expense (Lunney v. FC of T; Hayley v. FC of T (1958) 100 CLR 478 at 497-498; (1958) 11 ATD 404 at 412). There must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of the assessable income (Ronpibon Tin NL v. FC of T (1949) 78 CLR 47 at 56; (1949) 8 ATD 431 at 435).

34. Consequently, it is necessary to determine the connection between the particular outgoing and the operations by which the taxpayer more directly gains or produces his or her assessable income (Charles Moore & Co (WA) Pty Ltd v. FC of T (1956) 95 CLR 344 at 349-350; (1956) 11 ATD 147 at 148; (1956) 6 AITR 379 at 384; FC of T v. Cooper 91 ATC 4396 at 4403; (1991) 21 ATR 1616 at 1624; Roads and Traffic Authority of NSW v. FC of T 93 ATC 4508 at 4521; (1993) 26 ATR 76 at 91). Whether such a connection exists is a question of fact to be determined by reference to all the facts of the particular case.

Based on the evidence available in support of this application it is considered that some of the units you propose to study have insufficient connection to the skills or knowledge used in your current income earning activity. These units are – 1 and 2. There is no obvious connection between “Public International and Human Rights Law” or “Constitutional Law” and the subjects which you teach.

While “Engineering Practices” and “Project Management” have sections relating to anti-discrimination, contract terms and project management these are considered to have insufficient connection to justify deductibility for the units “Public International and Human Rights Law” and “Constitutional Law”.

Equally, it is considered that some units you propose to study have sufficient connection to the skills and knowledge used in your current income earning activity to justify a deduction. These units are – 3, 4 and 5. These units provide learning outcomes that are arguably directly connected to the units which you currently teach.