Edited version of private advice

Authorisation Number: 1051846095899

Date of advice: 22 June 2021

Ruling

Subject: Self education expenses

Question 1

Are your expenses incurred to complete a skills assessment through Trades Recognition Australia deductible as self-education expenses under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No.

Question 2

Is the expense of $XXXX incurred to complete a skills assessment through Trades Recognition Australia deductible under section 8-1 of the ITAA 1997?

Answer

Yes.

Question 3

Are your accommodation and car expenses incurred to complete a skills assessment through Trades Recognition Australia deductible under section 8-1 of the ITAA 1997?

Answer

No.

Question 4

Is the expenses of Certificate III and Certificate IV in commercial cookery deductible under section 8-1 of the ITAA 1997 as self-education expenses?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commences on:

5 November 20XX

Relevant facts and circumstances

You arrived in Australia during the year ended 30 June XXXX.

You commenced work immediately upon arrival as a tradesperson.

As part of your employment you were required to complete a skills assessment, comprised of stage 1, documentary evidence and stage 2, technical interview.

You incurred the expense of the skills assessment in the year ended 30 June XXXX.

In order to complete the skills assessment, you were required to travel away from home and incurred expenses for accommodation and car travel.

After completion of the skills assessment you completed a certificate III and certificate IV in your field.

Having your prior skills recognised through the skills assessment has led to the opportunity for you to earn increased income from your income earning activity.

You have worked for the same employer group since you arrived in Australia.

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 losses and outgoings which are incurred in the course of gaining or producing assessable income, except where the outgoings 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.

Paragraph 13 of TR 98/9, states that:

... the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction.

In your case you are incurred expenses to have your skills as a Chef assessed through Trades Recognition Australia in the XXXX financial year. As you have not incurred expenses to maintain or improve your skills, more so to have your current skills assessed, the Commissioner does not consider the expenses incurred for the skills assessment through Trades Recognition Australia were self-education expenses as per TR 98/9.

Therefore, as the skills assessment expenses are not considered self-education expenses in accordance with TR 98/9, the associated travel and accommodation expenses are not an allowable deduction as they were not in connection with a self-education activity (paragraph 89 of TR 98/9).

The Commissioner does accept that the expense of $ XXXX incurred for the cost of the skills assessment is incurred in the course of gaining or producing your assessable income as a Chef and therefore an allowable deduction under section 8-1 of the ITAA 1997.

After the completion of your skills assessment you subsequently studied Certificate III and Certificate IV in commercial cookery. As the study of these certificates enabled you to improve skills or knowledge in your current income producing activity (paragraph 13 of TR 98/9), the self-education expenses incurred for Certificate III and Certificate IV in commercial cookery are allowable as a deduction as self-education expenses.