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1 Are you entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 ('ITAA 1997) for your self-education expenses?

1 Yes. This ruling applies for the following periods : Year ended 30 June 20YY Year ending 30 June 20YY The scheme commenced on: 1 July 20YY

You are an Australian resident for tax purposes. You completed a Diploma of Nursing in MM 20YY. In MM 20YY you commenced employment as and Enrolled Nurse on a casual basis with a hospital. In MM 20YY this position was commuted to permanent part-time. You hold AHPRA certification as an Enrolled Nurse. In MM 20YY you commenced a Bachelor of Nursing degree full time at a university. You received recognition for prior learning for X units of study. The remaining units of study you have either enrolled in or have completed. Your employer has not reimbursed you for any costs of the course. You are an international student. You are not enrolled as a Commonwealth supported student for your university degree. You do not receive any study allowance or fee support for undertaking the course. You will compete the course of study in MM 20YY.

Income Tax Assessment Act 1997 section 8-1

Section 8-1 of the ITAA 1997 provides: (1) You can deduct from your assessable income any loss or outgoing to the extent that: (a) it is incurred in gaining or producing your assessable income; or (b) it is necessarily incurred in carrying on a business for the purposes of gaining or producing your assessable income. (2) However, you cannot deduct a loss or outgoing under this section to the extent that: (a) it is a loss or outgoing of capital, or of a capital nature; or (b) it is a loss or outgoing of a private or domestic nature; or (c) it is incurred in relation to gaining or producing you *exempt income or your *non -assessable non-exempt income; or (d) a provision of this Act prevents you from deducting it. 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 incurred by an individual .

To be deductible under section 8-1 of the ITAA 1997, the expenditure must be able to be characterised as having been incurred in gaining or producing assessable income. This means there must be a relationship, or close connection, between the expenditure and what it is that you do to produce your assessable income. In your case you incurred the Bachelor of Nursing course fees when you were working as an Enrolled Nurse of a hospital during the 20XX-XX income years. Your income earning activities as an Enrolled Nurse 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 in paragraph 22 of TR 2024/3). This is because the additional education and practical components of the Bachelor of Nursing will improve your ability to perform your duties. It can also be said in your case that 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 in paragraph 22 of TR 2024/3). This is because the education will enable you to become a registered nurse over an enrolled nurse.

Expenses incurred on improving skills and specific knowledge are not of a capital nature - they do not amount to the acquisition of something of an enduring nature (paragraph 29 of TR 2024/3). Therefore, in your case this does not preclude the deduction under section 8-1 of the ITAA 1997 and your course fees are not capital, or of a capital nature. The use of the phrase 'to the extent' in section 8-1 means that there are circumstances where expenses may be deductible only in part if incurred in gaining or producing assessable income as well as for some other use, object or purpose. It is the objective relationship between your expense and your income-producing activities which usually determines whether the expense is incurred in gaining or producing assessable income. Where expenses have distinct and severable parts, and some are for an income-producing purpose and others are for some other purpose, you apportion the expense according to its particular purpose (paragraphs 81-83 of TR 2024/3).

In your case there is no incidental purpose of the self-education expenses your incurred and they are wholly incurred in the gaining or producing of your assessable income. Therefore, there is no private or domestic nature to your expenses as you were working as an Enrolled Nurse when you incurred the expenses and they are not precluded from being deductible under section 8-1 of the ITAA 1997 (example 15 of paragraph 71 of TR 2024/3). Self-education expenses are not incurred in gaining or producing your assessable income if either of the following exclusions apply: • The self-education will enable you to get employment, to obtain new employment or to open up a new income-earning activity. 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). • 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).

Neither of these exclusions contained in paragraph 23 of TR 2024/3 are relevant to your circumstances and do not preclude the deduction from being allowed. Your self-education expenses of $X are therefore deductible under section 8-1 of the ITAA 1997 for the 2024-25 income year.