Edited version of private advice

Authorisation Number: 1052212553685

Date of advice: 19 January 2024

Ruling

Subject: Self-education expenses

Question

Are you entitled to a deduction for work related self-education expenses for your course?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are employed on a continuing basis.

You have studied a course since 20XX.

You are eligible for a staff discount on X amount of your course fees. The remaining amount of your fees are deferred.

In the 20XX income year, you incurred fees for your course of $XXXX in XX/20XX and $XXXX in XX/20XX.

On XX/XX/20XX, you were promoted within your workplace.

You state that your position duties include:

•         Designing and conducting audits to ensure that students are compliant with relevant legislation

•         Interpreting university policy

•         Ensuring that junior staff are trained and assisted correctly

•         Advising students and colleagues on student visa conditions and how they apply to a student's study and work responsibilities

•         Managing complex cases and appeals.

You do not consider your position to involve traditional legal work.

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 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.

Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business, discusses the circumstances under which self-education expenses are allowable as a deduction. A deduction is allowable for self-education expenses if a taxpayer's current income-earning activities are based on the exercise of a skill or some 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).

Similarly, if 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, a deduction is allowable.

However, 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. Such expenses of self-education are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income (Federal Commissioner of Taxation v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161 and paragraphs 15, and 48-62 of TR 98/9).

In your case, you are studying a course. The course description you have provided outlines that this course is an academic requirement for admission to legal practice.

Therefore, the purpose of the course is to open up a new discrete income earning activity and comes at a point too soon to be deductible under section 8-1 of the ITAA 1997.

Furthermore, the connection between your course and your employment position is too remote to provide the required connection between the study and your current income-earning activities.

Accordingly, you are not entitled to a deduction for the expenses you incur in respect of the study.