Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1051386945405
Date of advice: 18 June 2018
Ruling
Subject: Deductibility of supervision expenses
Question 1
Are you entitled to a deduction for supervision fees?
Answer
No.
This ruling applies for the following periods
Year ended 30 June 20xx
The scheme commenced on
1 July 20xx
Relevant facts and circumstances
You are a provisionally registered practitioner and as such complete a period of internship which requires supervised practice by a fully qualified practitioner.
You have a full-time paid role as a Provisional practitioner.
In order to gain full registration as a practitioner you are required to pay a fully qualified practitioner supervision fees as part of your internship.
As a fully registered practitioner you would also be required to complete supervision throughout the working year.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 8-1
Reasons for decision
Summary
You are not entitled to a deduction for your supervision expenses as they are being incurred to enable you to commence practicing as a fully qualified practitioner.
Detailed Reasoning
Work-related expenses generally fall for consideration under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). This section allows a deduction for losses and outgoings which are incurred in the course of gaining or producing your assessable income, unless they are of a capital, private or domestic nature.
The Commissioner’s view on the deductibility of self-education expenses is contained in Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business. The ruling explains that, provided there is sufficient connection between a course of self-education and current income earning activities, you are entitled to claim a deduction for your self-education expenses. However, as stated in paragraph 15 of TR 98/9, such expenses will not be deductible if the study is intended to:
● enable you to get employment,
● enable you to obtain new employment, or
● to open up a new income-earning activity (whether in business or in your current employment).
In such cases the expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.
In Assefa v FC of T [2009] AATA 2 (Assefa's case), it was considered whether studying a course of education in order to advance to a higher classification of nursing was opening up a new income earning activity. The taxpayer in this case is employed as a personal care assistant while studying to become an enrolled nurse.
The AAT held in Assefa's case that no deduction was allowable for the self-education expenses. It was determined that there was a significant difference between the position of enrolled nurse on one hand, and personal care assistant/nursing assistant on the other. The taxpayer was not considered to be incurring the expenditure in gaining or producing her assessable income, but was studying towards their initial qualification as an enrolled nurse.
This decision can be applied to your circumstances. You are currently practising supervised practitioner which is a prerequisite to you becoming a fully registered practitioner. We view this as leading up to a new income-earning activity.
While we acknowledge that you have attained the skills and you have commenced earning income in the relevant field, the predominant focus of the internship is to provide qualifications to become a fully registered practitioner.
As such, the supervision expenses are incurred at a point too soon to be regarded as having been incurred in gaining or producing your assessable income, and are therefore not deductible. The expenses incurred are more properly characterised as expenses incurred for the purposes of obtaining a new position or opening up a new income-earning activity.
Once you have attained full registration as a practitioner the ongoing fees paid in relation to supervision will become a deductible expense for you.