Edited version of private advice

Authorisation Number: 1052332915005

Date of advice: 20 November 2024

Ruling

Subject: Work related expenses

Question

Are you entitled to a deduction for the costs associated with your English-speaking course?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 2024

The scheme commenced on:

1 July 2023

Relevant facts and circumstances

You work for Employer Z.

You have worked for Employer Z for a couple of years.

You are employed as a professional with Employer Z.

One of your key clients has required you to attend their site, where you collaborate with their leaders and staff.

In order to communicate effectively in these client facing interactions, you enrolled in English speaking classes to improve your communication skills.

You enrolled in an online English-speaking course to improve your English speaking.

The online English-speaking course is done through Company Z.

You paid a tuition fee earlier in the income year and a further fee was paid later in the income year.

You paid the fees in full.

Your employer has not contributed to the costs associated with the English-speaking course.

You spend a couple of hours a week in class and a couple of hours per week working on your own.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Work-related expenses generally fall for consideration under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). This section allows a deduction for losses and outgoings which are incurred while gaining or producing assessable income, unless the losses or 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 2024/3 Income tax: deductibility of self-education expenses. In accordance with TR 2024/3, 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.

However, self-education expenses will not be deductible if the study is intended to:

•         enable you to get employment

•         enable you to obtain new employment, or

•         to open a new income-earning activity (whether in business or in your current employment).

Application to your circumstances

You enrolled in an English-speaking course to assist you with your communication skills.

This course will assist you to improve your English-speaking skills in order to better communicate with clients in meetings.

This course is not required in order for you to be employed as an AI Engineer.

While this course would be useful in improving your English skills the course is private and domestic in nature and is therefore not deductable.

The course and the course fees do not have the relevant connection with your income earning activities as the course puts you in a position to carry out your work duties and is not incurred in the carrying out of those duties.

The course fees are therefore not deductible under Section 8-1 of the ITAA 1997.