Edited version of private advice

Authorisation Number: 1051764180411

Date of advice: 8 October 2020

Ruling

Subject: Work related expenses - self-education

Question 1

Can you deduct an amount for the course fee you incurred for Course 1?

Answer

Yes. The course has a sufficient nexus with your employment and enables you to acquire a skill that is required in the course of your current employment.

Question 2

Can you deduct an amount for the course fee you incurred for Course 2?

Answer

No. There is insufficient nexus with your employment. Although the course will allow you to develop skills that will be beneficial in your employment, those skills are not directly required as part of your employment.

Question 3

Can you deduct an amount you incurred for the course fee for Course 3?

Answer

No. It relates to earning exempt income.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You attended 3 courses whilst on leave from Employer A and Employer B.

The courses were held overseas and in Australia. You were on annual leave and receiving work cover payments during this time.

As part of your duties with Employer A, you were required to gain a particular qualification. Undertaking Course 1 successfully allowed you to gain this qualification.

You undertook 3 separate courses.You have provided the relevant information regarding the subject of these courses.

You also receive exempt income.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Summary

You are entitled to a deduction for course 1 as this relates to your employment.However, you are not entitled to a deduction for the other two courses as it hasn't been demonstrated that there is sufficient nexus with your employment in these two positions and/or the course fees have been incurred in relation to earning exempt income.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 1997 allows a deduction where amounts are incurred in the earning or producing of assessable income. Self-education expenses are deductible under section 8-1 of the ITAA 1997 where they have a relevant connection to the current income-earning activities, where deductions are incurred in earning exempt income, one of the negative tests in section 8-1 of the ITAA 1997 is not met. That is, deductions must not be incurred in the earning of exempt income.

Subsection 51(5) of the ITAA 1997 provides that pay and allowances received by a taxpayer as a member of the Naval, Army or Airforce Reserve are exempt from income tax, except where the member is engaged in continuous full-time service. Therefore, if the income is considered exempt income, a deduction for the course (course 3) cannot be claimed.

As part of your role within your employment, you were required to be able to operate a certain vehicle/equipment. A deduction is allowable for self-education expenses if the income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables you to maintain or improve that skill or knowledge. As course 1 is directly linked to the exercise of a skill required in your employment, the amount incurred for this course is deductible.

In your application, you advised that, while working in a particular role, you have been involved in several traumatic and violent incidents. Although course 2 may have enabled you to learn skills relating to handling aggression and other tactics for use in unstable situations, it has been determined that the course doesn't relate directly to your required roles and responsibilities in this position. Therefore, you are unable to deduct the cost of course 2.

Course 3 does not relate to your income producing activities. This course would most likely relate to your exempt income, however, where you receive exempt income from such employment, deductions cannot be claimed.