Deductibility of self-education expenses
Self-education includes:
(a) courses undertaken at an educational institution (whether leading to a formal qualification or not)
(b) courses provided by a professional or industry organisation
(c) attendance at work-related conferences or seminars
(d) self-paced learning and study tours (whether within Australia or overseas).
Self-education expenses are deductible under section 8-1 to the extent that they:
(a) are incurred in gaining or producing your assessable income, and
(b) are not
(i) capital, private or domestic in nature
(ii) incurred in gaining or producing exempt or non-assessable non-exempt income
(iii) prevented from being deductible by a specific provision in the tax law.
A deduction is not available for self-education expenses incurred to the extent they are reimbursed.
In gaining or producing assessable income means there must be a relationship, or close connection, between the expenditure and what it is that you do to produce your assessable income, or if none is produced, would be expected to produce your assessable income.
It is not enough to show only that there is some perceived connection, general link or causal connection between the expenditure and the production of your income. The expenditure must have a close connection to the performance of the duties and activities through which you earn your income.
A partial deduction may be appropriate where only part of your expense is for self-education connected with your income-earning activities or where only part of the self-education is relevant to your current income-earning activities.
The ATO considers self-education expenses to be incurred in gaining or producing your assessable income if either or both of the following apply:
(a) Your income-earning activities are based on the exercise of a skill or some specific knowledge and the self-education enables you to maintain or improve that skill or knowledge. ( Principle 1 )
(b) The self-education objectively leads to, or is likely to lead to, an increase in your income from your current income-earning activities in the future. ( Principle 2 )
Self-education expenses are not incurred in gaining or producing your assessable income if any of the following applies:
(a) The self-education will enable you to get employment, to obtain new employment or to open up a new income-earning activity (whether in business or in your current employment). This includes studies relating to a particular profession, occupation or field of employment in which you are not yet engaged. These expenses are incurred at a point too soon to be regarded as incurred in gaining or producing your assessable income. ( Exclusion 1 )
(b) You are not undertaking income-earning activities to derive assessable income at the time you incurred the expenses. These expenses are not connected to any income-earning activity at the time they are incurred. ( Exclusion 2 )
In practice, the principles and exclusions outlined above are not mutually exclusive and should not be considered in isolation. Furthermore, the many cases dealing with self-education expenses and deductibility are no more than examples of the application of these general principles and exclusions to the facts of those cases.
You can see examples in tax ruling TR 2023/D1.
