Edited version of private advice

Authorisation Number: 1051768896749

Date of advice: 26 October 2020

Ruling

Subject: Self education expenses

Question

Are the course fees as part of Diploma of Human Resources Management you will undertake be deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No.

This ruling applies for the following period:

Year ending 30 June 2020

Year ending 30 June 2021

The scheme commences on:

1 July 2019

Relevant facts and circumstances

You are employed as a Training Coordinator.

You have commenced study of Diploma of Human Resources Management.

You will incur expenses for your studies.

Your employer will not contribute to these costs.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 section 26-20

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.

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. In accordance with TR 98/9, expenses of self-education will satisfy the requirements of section 8-1 of ITAA 1997 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 (FC of T v. Finn (1961) 106 CLR 60;(1961 12 ATD 348) (Finn's Case); or

§  the study of a subject of self-education objectively leads to, or is likely to lead to, an increase in a taxpayer's income from their current income earning activities in the future (FC of T v. Hatchett (1971) 125 CLR 494; 71ATC 4184; (1971) 2ATR 557 (Hatchett's Case).

Therefore, 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.

In your case you are a Training Coordinator studying Diploma of Human Resources Management.

The study of Human Resources Management allows for you to commence working in the Human Recourses sector while you currently work in the training sector. Therefore, the study of Human Resources Management does not have the relevant nexus with the derivation of your assessable income to be an allowable deduction.

While the subjects may be useful, they do not have sufficient connection in the derivation of your assessable income. Any connection they have to your assessable income is remote and incidental.

Accordingly, you are not entitled to a deduction under section 8-1 ITAA 1997 for these expenses.