Edited version of private advice

Authorisation Number: 1052165317584

Date of advice: 6 September 2023

Ruling

Subject: Self-education expenses

Question

Can I claim the Master of Psychology self-education expenses which is relevant to my role as a psychology tutor at XXX University?

Answer

No.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 2020

Relevant facts and circumstances

You completed a 4-year undergraduate degree in Psychology in November 20XX.

You commenced a Master of Psychology (Professional) course at XXX University in February 20XX and expect to complete the course in November 20XX.

You incurred semester 1 course fees of $XX and student services fees of $XX (total $XX).

You received a Youth Allowance to study.

You are wholly responsible for payment of all fees.

You advised that upon completion of the course, you can either work as a psychologist, do more study, carry out research for a PhD and/or continue employment with XXX University.

The intended learning outcomes of the Master of Psychology (Professional) degree, as per XXX University's website, are as follows:

•         Apply psychology knowledge, principles and practice to achieve client-centred and evidence-informed outcomes

•         Generate effective solutions through critical analysis, reflective practice and professional reasoning

•         Critically appraise information and apply it to contemporary psychology theory and practice

•         Communicate effectively and appropriately to ensure positive and effective therapeutic and inter-professional relationships; use relevant documentation and reporting processes including the ethical disclosure of professional information

•         Evaluate and apply appropriate technologies to contemporary psychology practice

•         Develop and apply life-long learning skills to achieve professional competence; engage in research to further develop personal and professional knowledge and skills

•         Comply with APAC standards and practices through integration of local and global perspectives relevant to the field

•         Practice psychology in a culturally responsive and inclusive manner, incorporating perspectives of multiple stakeholders

•         Work in a professional and collaborative manner to meet ethical and legal responsibilities

•         Began casual employment with XXX University as a part-time tutor for undergraduate classes in Psychology in February 20XX after enrolling in the Master of Psychology (Professional) course.

This course provides students with education and training in the professional practice of psychology. The course is designed to integrate coursework, research, and placement components with an emphasis on experiential learning.

You began casual employment with XXX University as a part-time tutor for undergraduate classes in Psychology in February 20XX after enrolling in the Master of Psychology (Professional) course.

You advised your duties as a tutor for the undergraduate Psychology course, are to:

•         Facilitate/run classes in the Abnormal Psychology (third year unit) and Child Developmental Psychology (second year unit)

•         Prepare and conduct workshop/tutorial materials and demonstrations

•         Mark assignments and exams from your home

•         Provide written feedback to students in relation to their assignments (not exams).

Relevant legislative provisions

Section 8-1 of the Income Tax Assessment Act 1997

Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business

Reasons for decision

Your self-education expenses for your Master of Psychology (Professional) course are not deductible because these expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.

You enrolled in the Master of Psychology (Professional) course before commencing your employment as a tutor at XXX University and enrolment in the course enabled you to find new employment, not to maintain or improve skills in current employment.

A deduction is not allowable for self-education expenses if the subject of self-education is designed to get employment, to obtain new employment or to open up a new income-earning activity.

Deductibility under section 8-1 of the Income Tax Assessment Act 1997

In the course of' gaining or producing your assessable income,

22. The requirement that expenses be incurred in the course of producing assessable income means that it is not enough to show only that there is some general link or causal connection between expenditure and the production of income. The expenditure must have a sufficiently close connection to performance of the employment duties and activities through which the employee earns income.

23. Accordingly, in some cases, expenditure would be regarded as too remote from the income-earning activities or incurred only as a prerequisite to earning income, and not incurred in the course of producing that income.

25. Other examples of expenditure that would be too remote from the income-earning activity or incurred at a point too soon to be characterised as incurred in the course of earning assessable income, would be expenses of looking for and securing new employment. This would also be the case for relocation expenses to work in a different city or state. Similarly, education expenses to obtain qualifications for new employment would not be incurred in the course of gaining or producing relevant assessable income.

Deductibility of Self-Education expenses (Tax Ruling (TR) 98/9)

TR 98/9 provides that:

15. 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.

57. Example: Shannon, who is undertaking a 4-year university degree in mining engineering, takes a job as a casual employee with a mining company during the end of year holiday period. It is the company's policy to take only students who are pursuing relevant studies. Shannon is not entitled to a deduction for the cost of the course because the study is designed to get future employment in the field. It is incurred at a point too soon.

58. We believe that Maddalena also supports our view that no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to open up a new income-earning activity, whether in business or in the taxpayer's current employment. In Case Z1 92 ATC 101; AAT Case 7541 (1991) 22 ATR 3549, a public service clerk studying for a law degree later obtained a legal officer position in the public service. Such expenses of self-education were incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.