Whilst self-education is an important investment in one’s career advancement and personal growth, the financial burden associated can be significant. 

Fortunately, a tax deduction can be claimed for self-education costs provided that the relevant conditions are met. 

The ATO have recently published Taxation Ruling TR 2024/3 to update their guidance on when the requirements to claim a tax deduction will be met. 

The ATO ruling covers a range of self-education settings, including: 

• Courses undertaken at an education institution; 
• Courses provided by industry or professional organisations; 
• Conferences and seminars; and 
• Self-paced learning and study tours. 

The costs associated with self-education that may be deductible include items such as course fees, books, subscriptions, depreciation of equipment and stationery.  Deductible items may also include travel and accommodation costs and conference/seminar attendance fees. 

In some circumstances an apportionment of expenses may be required where they are not wholly related to the deductible self-education. 

It should also be noted that no deduction can be claimed where the employer reimburses the self-education expenses. 

The legislative principal that governs when self-education expenditure will be tax deductible is when that expenditure is incurred in gaining or producing your assessable (taxable) income, and: 

• 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; or 
• The self-education objectively leads to, or is likely to lead to, an increase in your income from your current income earning activities. 

It should be noted that self-education expenses related to obtaining new employment, opening up a new income-earning activity, or incurred when not actively undertaking income-earning activities will not be deductible. 

Determining if these requirements are met will be straightforward in many instances.  However, it is not uncommon to encounter situations where the answer is less clear cut. 

We note that the ATO take a narrow interpretation of when the requirements will be satisfied and are currently focussed on reigning in the $3.6b ‘tax gap’ associated with personal tax deductions. 

As such, we recommend that taxpayers exercise caution when claiming self-education deductions.   

In this respect, the new Tax Ruling TR 2024/3 provides valuable guidance.  The ATO’s website content is also useful to gain an understanding of ‘what’s in’ and ‘what’s out’. 

In the lead-up to tax time 2024 we encourage readers to get in touch if they have specific questions around what deductions can be claimed and the associated record keeping requirements. 

Navigating the deductibility of self-education expenses requires a thorough understanding of the requirements.  However, when armed with the right knowledge, individuals can maximize their tax deductions associated with investing in their professional development. 

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