Edited version of private advice

Authorisation Number: 1052074052449

Date of advice: 6 January 2023

Ruling

Subject: Work related self-education expenses

Question

Are you entitled to a deduction for self-education expenses?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You hold a qualification in a specialist field.

You have been employed in this field for several years.

You are required to complete a revalidation course every few years to maintain a certificate of competency in your field.

You work on a contract basis.

Until July 20XX, you were working for a company in Country X and Australia onboard a ship.

Your contract ended prior to your certificate of competency expiring.

You paid for your revalidation course in March 20XX.

In March 2022 you travelled interstate to attend this course.

Your course commenced in March 20XX and concluded in April 20XX.

Whilst undertaking your course, you stayed in nearby accommodation and continued to pay rent towards your home.

In April 20XX, you returned home.

You incurred travel expenses and meal expenses whilst you were away.

In April 20XX, you undertook a medical check that was required for you to obtain your certificate of competency.

In April 20XX, you applied to the relevant authority to receive your certificate of competency.

Your certificate was issued to you in April 20XX.

You commenced working for another company in July 20XX within your specialist field.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Summary

You are not entitled to a deduction for your course as the expenses were incurred in between your previous employment contract ending and your current employment contract commencing.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent that they are incurred in gaining or producing assessable income unless the outgoings are capital, private or domestic in nature or relate to earning exempt income.

Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business (TR 98/9) explains the various circumstances in which self-education expenses are allowable as a deduction. Relevantly, a deduction is allowable for self-education expenses if a taxpayer's income earning activities, at the time they incur the expense, are based on the exercise of a skill or 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; (1961) AITR 406).

You have incurred expenses for your revalidation course. For these expenses to be deductible, they must have an appropriate connection to your income earning activities at the time the expenses were incurred, and must not be capital, private or domestic in nature.

Paragraph 15 of TR 98/9 discusses the fact that the study will enable a taxpayer to get employment, to obtain new employment or to open up a new income-earning activity (whether in business or in the taxpayer's current employment) is not a sufficient basis in itself for self-education expenses to be deductible. This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.

This is further outlined in the decision of the High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541 which establishes the principle that no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to get employment or to obtain new employment. Such expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.

Although your course was directly related to your profession and you are required to undertake the course every few years to achieve competency in your field, your course was undertaken in a period between your previous employment contract ending and your current employment contract commencing. You are therefore not entitled to claim self-education expenses in respect of this course as you were not yet engaged in employment.