TAXATION - income tax - employee - deduction for self-education expenditure - whether expenses incurred in gaining or producing assessable income - necessary nexus to income-earning activity as employee - objection decision affirmed

Income Tax Assessment Act 1997 (Cth) s 8-1

Taxation Administration Act 1953 (Cth) s 14ZZK

Commissioner of Taxation v Hatchett [1971] HCA 47

Australian Taxation Office, Taxation Ruling TR 2024/3 - Income tax: deductibility of self-education expenses incurred by an individual

1. This case is about the deductibility under s 8-1 Income Tax Assessment Act 1997 (Cth) ('ITAA 1997') of self-education and related expenses that the applicant, Mr. Bhattacharya, incurred in the tax year ending 30 June 2022 ('relevant income year').
2. Mr. Bhattacharya lodged his tax return for the relevant income year on 24 July 2022 and was issued a notice of assessment for that year on 29 July 2022. Mr. Bhattacharya lodged a self-objection (dated 23 October 2024 and received by the Respondent on 29 October 2024) ('Objection') to the assessment, seeking to amend his return for that year with claims of additional deductible amounts for expenditure on online educational and training courses and related computer software and hardware in the amount of $25,392, as well as expenditure on membership fees in the amount of $6,149.[1]
3. This case pertains only to Mr. Bhattacharya's claims for deductions for the additional expenditure identified in his Objection; that is, the additional expenditure in the amount of $25,392 on online courses and related software and hardware and the additional expenditure in the amount of $6,149 on membership fees (together, the 'relevant expenditure'). Though the parties' submissions and evidence sometimes conflate expenditure claimed in Mr. Bhattacharya's originally lodged tax return for the relevant income year with the relevant expenditure, the Notice of Objection Decision ('Objection Decision'), the Respondent's SFIC, and the Respondent's Submissions all make clear that this case pertains only to the relevant expenditure,[2] as do the Respondent's submissions at the Hearing.
4. The parties communicated throughout 2024 regarding Mr. Bhattacharya's additional claims, with Mr. Bhattacharya providing a variety of spreadsheets, statements of account, and receipts by way of substantiating the claimed deductions.
5. On 9 January 2025, the Respondent issued its Objection Decision to Mr. Bhattacharya, disallowing all of the additional claimed deductions for the relevant expenditure.[3]
6. On 27 January 2025, Mr. Bhattacharya applied to the Tribunal for review of the Objection Decision. As the taxpayer, Mr. Bhattacharya has the burden of proving, on the balance of probabilities, that the assessment for the relevant income year was incorrect and what it should have been.[4]
7. Determining whether Mr. Bhattacharya has discharged his burden requires the Tribunal to consider whether Mr. Bhattacharya is entitled to deductions under s 8-1 ITAA 1997 for the relevant expenditure claimed in his Objection and disallowed in the Objection Decision. Central to this decision is the scope of Mr. Bhattacharya's role as an employee during the relevant income year, and the nexus between the relevant expenditure and Mr. Bhattacharya's role.

1. During the relevant income year, Mr. Bhattacharya worked as an employee for Fujitsu Australia Ltd ('Fujitsu'), part of a global information and communications technology conglomerate that offers its corporate and government clients comprehensive information technology ('IT') services, digital solutions, and computer hardware products. Fujitsu specialises in cloud services, cybersecurity, data centre management, and artificial intelligence ('AI').
2. Mr. Bhattacharya was hired by Fujitsu in 2016 as a Technical Requirements Manager Air7003 and was working in that role during the relevant income year. Mr. Bhattacharya provided his initial employment contract with Fujitsu, but it does not contain a role description. The Respondent refers to a job description for the similar role of Technical Account Manager ('TAM') available on Fujitsu's webpage, which provides,

Support Service provides lifecycle management for Fujitsu products on contract within the customer estate and provides a point of contact for technical questions and reviews. A named TAM is assigned to the account who will develop an understanding of the Customer's business requirements and infrastructure along with building a long term working relationship

3. Mr. Bhattacharya claims that he was initially employed as an enterprise architect and that his responsibilities differed from the job description provided above. He said that his role at Fujitsu did not initially include any sales and marketing responsibilities, but that it evolved to include marketing and sales responsibilities, including during the relevant income year. In support of his Objection, Mr. Bhattacharya provides an explanation for his expenditure in which he claims that:

Since 2020, Fujitsu informed me that to maintain my current job I needed to: > > • Train myself on all forms of marketing and sales. > > • Find my own billable roles within the organization. > > • Obtain a cybersecurity management certificate from a recognized organization in Australia. > > To fulfill these requirements, I: > > • Undertook numerous training programs focused on marketing and sales. > > • Faced challenges as no single institute offered comprehensive online training for all online platforms.[5]

4. In a letter dated 14 July 2025, Mr. Bhattacharya states that he

was required to complete some business development activities that meant I needed to undergo sales and marketing trainings to serve in my role at Fujitsu. There was no written instruction provided to this effect or about my business development activities.[6]

5. In support of his contention that his role changed into one that required him to do sales and marketing, Mr. Bhattacharya cites provisions in his initial employment contract that required him to diligently perform his duties, provided that his duties may be varied from time to time, and required him to comply with lawful directions.
6. Mr. Bhattacharya's former supervisor, Mr. Garner, was Fujitsu's Head of Cybersecurity in the years prior to the relevant income year, and Mr. Bhattacharya reported directly to Mr. Garner until the latter's departure in September 2019. Mr. Garner said that Mr. Bhattacharya worked first as an enterprise architect on a project for Fujitsu's client, the Department of Defence, and then transitioned to a cybersecurity architect role for a subsequent project for another client of Fujitsu's, the Australian Federal Police. Mr. Garner said that in neither role were Mr. Bhattacharya's responsibilities captured in the wording of his employment contract. Mr. Garner said that this was commonplace, and that he also ended up doing work that was not described in his employment contract or job description. Mr. Garner said that Mr. Bhattacharya's role as an enterprise architect was not a business development role per se, but that cybersecurity was a business unit that was trying to grow and so required more business development activity from Mr. Bhattacharya. Mr. Bhattacharya was expected to engage with customers and come up with, and implement, solutions that Fujitsu could provide to them. Mr. Garner said that Fujitsu wanted its employees to become thoughtleaders so that they could get business from clients. He said that Fujitsu would not have provided written instructions for Mr. Bhattacharya to take courses, but that not all expectations were reduced to writing. He said that Fujitsu had its own salespeople, but that employees working on the technical side of things were expected to contribute to Fujitsu's business development efforts.
7. In a letter dated 14 July 2025, Mr, Garner writes:

During his time with us, Shantanu's role included responsibilities beyond technical delivery, specifically, business development and customer engagement activities. These business development (BDM) duties were a formal part of his role, and he was expected to support go-to-market efforts, engage with clients, and contribute to the commercial success of the team.

While there were no formal written instructions requiring specific training, team members were supported and encouraged to undertake external development relevant to their responsibilities. Shantanu's decision to complete sales and marketing courses was consistent with the expectations of his role and aligned with the skills needed to succeed in those business-facing functions.

I am happy to confirm that this training was relevant to his role and aligned with our team's approach to professional development at the time.[7]

1. While Mr. Garner was no longer Mr. Bhattacharya's supervisor during the relevant income year, it is contended that Mr. Bhattacharya's job remained more or less the same after Mr. Garner moved on to a different role.
2. In September 2022, Mr. Bhattacharya was promoted to the role of Senior Domain Architect Security. Mr. Bhattacharya provided his employment contract for this role, but it does not contain a role description. The Respondent refers to a job description for the similar role of Lead Domain Architect, available on Fujitsu's LinkedIn page, which provides:

Support for Digital Workplace (DW) strategy by championing modern workplace technologies and enhancing the technical experience for clients and internal teams. The role involves ... focus on driving adoption of Microsoft 365, Teams, Viva, and related platforms through technical enablement, solution evangelism, and stakeholder engagement. Will play a key role in translating technical capabilities into business value, supporting go-to-market initiatives, and contributing to the continuous improvement of DW offerings.

3. Mr. Bhattacharya contends that it was part of his role during the relevant income year to bring in more business from government clients and that he was required to take courses in sales and marketing to help him perform his role.
4. I accept that Mr. Bhattacharya's role at Fujitsu was fluid, and that it was fully described in neither his employment contracts nor in the cited job descriptions. I further accept that Mr. Bhattacharya's role came to include aspects of business development, in the sense that doing good technical work for current clients could lead to more work from them and others. I note that the same could be said for most client-facing employees in service businesses.
5. I do not accept that the Mr. Bhattacharya's role became one that featured sales and marketing responsibilities, either formally or informally. I do not accept that the applicant's business development responsibilities were a predominant or even a substantial part of his job. As the Respondent notes, there is nothing in writing from Fujitsu requiring Mr. Bhattacharya to undertake sales and marketing activities, let alone take self-education courses in those areas. Mr. Bhattacharya's employment contracts do not support his contentions that he was required to undertake sales and marketing activities or to educate himself in such matters.
6. Mr. Garner's evidence also does not support Mr. Bhattacharya's claims in this regard. While Mr. Garner's letter supports the contention that business development was part of Mr. Bhattacharya's job, it does not support the contention that he was required to undertake sales and marketing activity (or undertake self-education related thereto). I consider that the expectation that Mr. Bhattacharya 'support go-to-market efforts, engage with clients, and contribute to the commercial success of the team' is an expectation of any client-facing employee in a services business and does not indicate that Mr. Bhattacharya was expected to do sales and marketing work or that business development became a significant part of his responsibilities.
7. Based on the evidence before me, I find that the applicant's role, at core, was a technical one whose essence was providing computer systems services to Fujitsu's clients by designing and implementing secure and scalable IT solutions. As an enterprise and cybersecurity architect, Mr. Bhattacharya's essential job was to deliver the IT services Fujitsu had contracted to provide to its large institutional clients. This technical role did not involve sales and marketing responsibilities; to the extent that it involved some elements of business development, those responsibilities did not involve sales and marketing skills or knowledge.
8. I do not accept Mr. Bhattacharya's contention that his need to find 'billable roles' within Fujitsu necessitated his undertaking of sales and marketing activities or courses. Mr. Bhattacharya has not established that 'billable roles' refers to anything other than performing work that can be charged to a client. As discussed above, Mr. Bhattacharya's role was primarily performing computer-related work for Fujitsu's clients, not promoting Fujitsu's business.

1. The nature of the relevant expenditure is not in dispute. Both parties describe the self-education courses for which Mr. Bhattacharya is seeking deductions as aimed at entrepreneurs. The online courses, related software and hardware, and membership fees Mr. Bhattacharya paid for all relate to creating one's own online business selling products, creating websites, earning affiliate commissions, becoming a better online marketer, growing a business through using AI and chatbots, creating low-content books for online sales, and creating video and other online content.
2. Mr. Bhattacharya contends that the courses he took, though generally aimed at entrepreneurs, were also useful to him in his role at Fujitsu. He explained that while Fujitsu did not require him to create websites, for example, courses in website design assisted him in doing webinars for prospective clients and establishing his reputation, which would bring in business for Fujitsu.
3. Mr. Bhattacharya's expenditure on software and hardware at issue in this case is derivative of his expenditure on online courses. Mr. Bhattacharya explained that he 'purchased software and hardware to track test campaigns and perform practical exercises' related to the courses he had signed up for; and said that the hardware and software 'was required to practice the skills I learnt' and allowed him to 'search for quality courses and memberships'.[8] Like Mr. Bhattacharya's expenditure on online courses, the software and hardware expenditure relates to AI-driven online content production, online marketing, creating websites, growing customer base, and coaching tools for growing a business.
4. Mr. Bhattacharya's relevant expenditure also includes payment for a membership fee to get 'entry to the inner circle' of Robby Blanchard, a self-described expert on digital marketing, online entrepreneurship, and affiliate marketing.
5. While the relevant expenditure is discussed in terms of the different categories to which it belongs, it all shares the same general purpose of educating Mr. Bhattacharya about online entrepreneurship, content creation, sales, and marketing, and is analysed below on such a basis.

IS MR. BHATTACHARYA ENTITLED TO DEDUCTIONS FOR THE RELEVANT EXPENDITURE?

1. The substantive issue in this case is whether Mr. Bhattacharya can deduct the relevant expenditure under s 8-1 of ITAA 1997. To be deductible under that provision, expenditure must satisfy the 'positive limb' (s 8-1(1)) and also not get caught by the 'negative limb' (s 8-1(2)). The positive limb requires that, for expenditure to be deductible, it must be incurred in the gaining of one's income or in the course of one carrying on a business. The negative limb requires that the expenditure not be capital or private in nature, that it not be related to earning income that is exempt, and that its deducibility not be prevented elsewhere in the ITAA 1997.
2. The relevant rule for the purposes of this decision is s 8-1(1)(a), which provides that a taxpayer can deduct from their assessable income 'any loss or outgoing to the extent that [i]t is incurred in gaining or producing [the taxpayer's] assessable income' (italics added). It is well established that the italicised words mean 'in the course of' gaining or producing assessable income and 'do not convey the meaning of outgoings incurred "in connection with" or "for the purpose" of deriving assessable income'.[9] There must be a sufficient nexus between the expenditure and income-earning activity in order for the expenditure to be deductible.
3. With regard to the requisite nexus, Taxation Ruling TR 2024/3 - Income tax: deductibility of self-education expenses incurred by an individual ('TR 2024/3') provides:

15. 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, or if none is produced, would be expected to produce your assessable income. > > 16. 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. (internal citations omitted) > > ... > > 22. Self-education expenses are incurred in gaining or producing your assessable income if either or both of the following apply: > > > • 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) > > > > • 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) > > > > ... > > > > 28. Courts and tribunals have found the following when considering whether self-education expenses were incurred to maintain or improve knowledge or skills: > > > > • If the self-education is too general in terms of your current income-earning activities, the necessary connection between the self-education expense and the income-earning activity does not exist. This is often the outcome for the cost of self-improvement or personal development courses because the knowledge and skills obtained is too general. > > > > • Self-education that results in you being better equipped to perform your current income-earning activities is deductible where the self-education has the requisite connection to your income-earning activities at the time. (internal citations omitted)

4. A leading authority on the issue of nexus is Commissioner of Taxation (Cth) v Hatchett [1971] HCA 47 ('Hatchett'). In that case, a teacher who was encouraged by his employer to undertake self-education was allowed deductions for university fees for a Teacher's Higher Certificate that directly led to the teacher's promotion and higher salary, but was not allowed deductions for fees for his Bachelor of Arts courses because they did not directly relate to his specific duties as a primary school teacher.
5. With regard to the latter, Menzies J observed that

Enlightened employers often encourage employees to improve their bodies and their minds, and assist them to do so. Such encouragement is not, of itself, enough to warrant the deduction of outgoings for these purposes. The test to be applied is a more stringent one, namely were the outgoings incurred in gaining assessable income? > > ... > > I am not able to find any connection between the payment of fees and the assessable income of the tax-payer beyond the circumstance, which I take to be self-evident, that a teacher who has pursued university studies is likely to be a better teacher than if he had not done so and is therefore more likely to obtain promotion within the department. In my opinion this general consideration is not enough to make the fees deductible; there must be a perceived connexion between the outgoing and assessable income.[10]

6. I am not satisfied that Mr. Bhattacharya has demonstrated that the relevant expenditure had the requisite nexus with his earning activities in his role as an employee. The relevant expenditure was not required by Mr. Bhattacharya's employer; did not maintain or improve a skill or some specific knowledge on which his income-earning activities were based; and did not lead to a promotion or an increase in his income from his then-current income-earning activity. Mr. Bhattacharya has not demonstrated that there was a close connection between the relevant expenditure and his work providing IT services to Fujitsu's clients.
7. Mr. Bhattacharya claims that he was required to do training in sales and marketing because the responsibilities of his role had changed to include a greater emphasis on business development and that he would not have been able to continue working at Fujitsu if he had not undertaken the online courses at issue. I have already rejected the premise of this contention above, and the evidence does not establish that Mr. Bhattacharya was required to undertake the type of self-education that is at issue in this case. There is nothing in writing from Fujitsu to this effect, and Mr. Garner's letter and oral evidence acknowledge that there was no requirement for Mr. Bhattacharya to undertake any such training. As discussed in Hatchett, that Mr. Bhattacharya was 'encouraged' to pursue further study does not in and of itself warrant deductibility of the relevant expenditure.
8. I do not accept that Mr. Bhattacharya's income-earning activity as an employee was based on the exercise of skills or knowledge related to entrepreneurial online content production, sales, or marketing. Based on the evidence, I have found that Mr. Bhattacharya's role was essentially a technical one, and that it did not include marketing and sales responsibilities. Mr. Bhattacharya's self-education expenditure related to online entrepreneurialism did not result in him being better equipped to perform his role at Fujitsu of providing IT and computer services to his employer's clients.
9. Mr. Bhattacharya has not shown that the relevant expenditure had a direct connection to an increase in his earnings or likelihood of advancement. There are no such provisions in Mr. Bhattacharya's employment contracts, nor are there any such indications that Fujitsu otherwise communicated as much to Mr. Bhattacharya in writing or otherwise. The evidence before me does not indicate that the relevant expenditure had a close connection to a greater likelihood of promotion or increased pay. As discussed in the passage from Hackett cited above at [32], it is not sufficient that Mr. Bhattacharya's self-education might have made him a more knowledgeable employee as a general matter. To the extent that Mr. Bhattacharya acquired skills and knowledge through his self-education, it has not been established that they were skills and knowledge used in his job or that lead to his promotion.
10. It can only be said that the relevant expenditure merely enhanced Mr. Bhattacharya's general knowledge and personal capacity. I consider that Mr. Garner's oral evidence and letter, in which he writes that '[Mr. Bhattacharya's] decision to complete sales and marketing courses was consistent with the expectations of his role and aligned with the skills needed to succeed in those business-facing functions,' support only that the expenditure had a vague and general relationship to his responsibilities as an employee. I consider that the relevant expenditure related to Mr. Bhattacharya's self-improvement and personal development rather than to his role as an employee at Fujitsu.
11. In conclusion, Mr. Bhattacharya's relevant expenditure did not relate to his employment duties or Fujitsu's business operations. The relevant expenditure related to online content creation, affiliate marketing, and entrepreneurship; whereas Mr. Bhattacharya's work at Fujitsu related to providing technical IT and computer services to Fujitsu's clients. I agree with the Respondent's contention that Mr. Bhattacharya's relevant expenditure did not bear a sufficient nexus with his income-earning activities to satisfy the positive limb of s 8-1.
12. For completeness, I note that the Respondent also contends that Mr. Bhattacharya has not sufficiently substantiated his relevant expenditure in order for it to be deductible. However, given my findings above, it is not necessary to address this issue.

1. As Mr. Bhattacharya has not discharged his burden of showing that the assessment was incorrect and what it should have been, the reviewable objection decision is affirmed.

Ms. Ksenia Vasik, Australian Taxation Office Litigation and Legal Services

[1] The documentary evidence in this case is contained mainly in the Joint Tender Bundle prepared by the Respondent and identified as Exhibit 1 at the Tribunal hearing held on 20 February 2026 ('Hearing'). The Joint Tender Bundle contains five tabs (sequentially numbered starting at JTB1). JTB1 contains the documents ('Tribunal Documents') filed pursuant to s 14ZZF of the Tax Administration Act 1953 (Cth) ('TAA 1953'), which are identified and sequentially tabbed starting with T1. JTB2 and JTB3, respectively, contain letters from the applicant and a witness, Mr. Laurance Garner. JTB4 contains the Respondent's Statement of Facts, Issues and Contentions (Respondent's SFIC) and JTB5 contains the Applicant's Statement of Facts, Issues and Contentions (Applicant's SFIC). Page number references are to the Joint Tender Bundle page numbers. The Respondent also filed a written submission on 11 February 2026 ('Respondent's Submissions') that was not part of the Joint Tender Bundle and that was identified as Exhibit 2 at the Hearing. Oral evidence was given at the Hearing by Mr. Bhattacharya and Mr. Garner.

[2] Objection Decision, JTB1, T1, p. 264 at [27] and [39]; Respondent's SFIC, JTB4, p. 283, at [7], [51], and [53]; Respondent's Submissions at [58].

[3] JTB1, T1, p. 264 at [27] and [39].

[4] s 14ZZK(b)(i) Tax Administration Act 1953 (Cth) (TAA 1953).

[9] TR 2024/3 at [14]; Commissioner of Taxation v Payne [2001] HCA 3 at [9].