Edited version of private advice

Authorisation Number: 1052338250345

Date of advice: 4 December 2024

Ruling

Subject: Self education expenses

Question

Are the course fees paid in connection with the self-education course an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997?

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 currently employed as a professional with Employer Z.

You have enrolled in a course of education.

You will study a variety of related subjects.

Your current employer is not contributing financially to the course fees.

You have paid the course fees.

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).

In the case of Assefa v FC of T [2009] AATA 2 (Assefa's case), it was considered whether studying a course of education in order to advance to a higher classification of nursing was opening up a new income earning activity. The taxpayer in this case was employed as an assistant in nursing and a care service employee while studying a Bachelor of Nursing degree.

The Administrative Appeals Tribunal held in Assefa's case that no deduction was allowable for the self-education expenses. It was determined that there was a significant difference between the position of enrolled nurse and registered nurse on one hand, and personal care assistant/nursing assistant on the other. The taxpayer was not considered to be incurring the expenditure in gaining or producing her assessable income as a personal care assistant/nursing assistant but was studying towards their initial qualification as a registered nurse.

Application to your circumstances

You have enrolled in a course of education.

This course will enable you to be a registered professional upon successful completion of the course.

The completion of the course is not required for you to be employed in your current position.

The study enables you to open up a new income producing activity.

The course fees are therefore not an allowable deduction under Section 8-1 of the ITAA 1997 as the course does not have the relevant connection to your current employment.