Affiliate marketing courses, AI chatbots and an inner circle membership, claimed against an enterprise IT salary.
Your client claims $31,541 in self-education deductions. Online courses in affiliate marketing, AI chatbots, and website creation. They work in enterprise IT.
The ATO disallows the lot. Your client objects. The Tribunal agrees with the ATO. Bhattacharya and Commissioner of Taxation [2026] ARTA 538.
What happened
Bhattacharya was a Technical Requirements Manager on the Air7003 project at Fujitsu, hired in 2016 to provide IT services [8-9]. He claimed his role had evolved to include business development and marketing responsibilities [10].
The Tribunal accepted his role was fluid but did not accept it featured sales or marketing responsibilities, formally or informally [18-19]. At its core, the role was technical [21].
He enrolled in online courses targeting entrepreneurs - affiliate marketing, online business building, AI chatbot development, and website creation [23]. He also claimed software, hardware for tracking marketing campaigns, and a membership fee for a digital marketing expert’s “inner circle” [25-26].
The legal test
Section 8-1(1) ITAA 1997 requires a sufficient nexus between the expense and income-earning activities. TR 2024/3 identifies two pathways: the expense must maintain or improve skills used in current duties, or it must objectively lead to an increase in income [30].
The Tribunal applied Hatchett [1971] HCA 47. In that case, a teacher was allowed deductions for a Higher Certificate that led directly to his promotion. His BA was not deductible as it did not relate to his specific duties [31]. Employer encouragement alone is not enough to establish the nexus [32].
The Tribunal was not satisfied the nexus existed [33]. The courses were not required by Fujitsu. They did not maintain skills used in his income-earning activities. They did not lead to a promotion or pay increase [33-36].
His former supervisor’s supporting letter? It established only a “vague and general relationship” between the courses and his employment [37].
The practical takeaway
The expenditure related to online content creation, affiliate marketing, and entrepreneurship, not his employment duties [38]. It merely enhanced general knowledge and personal capacity [37].
This is a textbook application of the Hatchett distinction. General self-improvement is not deductible. The nexus must be specific and direct.
If your client is claiming self-education expenses, ask two questions. First, does the course content directly relate to their current duties? Second, can they demonstrate the connection goes beyond employer encouragement? A letter from a supervisor saying training is “beneficial” will not get you over the line.
General information only. This note was accurate when written. The law may have changed since and the note is not updated. It is not legal or tax advice, does not take account of your circumstances and must not be relied upon as a substitute for advice on your own matter. If the issue is live for you or your client, email arda@nortonquaytaxlaw.com.au for advice on the current position.