ATO Interpretative Decision
ATO ID 2003/33 (Withdrawn)
Income Tax
BOTPLS - deductibility of loan repaymentsFOI status: may be released
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This ATO ID is withdrawn as the position stated in this ATO ID is no longer current. From 1 January 2005, Bridging for Overseas Trained Professionals Loan Scheme (BOPTLS) debts became accumulated Higher Education Contribution Scheme (HECS) debts. From 1 June 2006, HECS debts became Higher Education Loan Programme (HELP) debts.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 25 July 2008
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the taxpayer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for repayments of a loan under the Bridging for Overseas-Trained Professionals Loan Scheme (BOPTLS)?
Decision
No. The taxpayer is not entitled to a deduction under section 8-1 of the ITAA 1997 for repayments of a loan under the BOPTLS as paragraph 26-20(1)(c) of the ITAA 1997 prevents the deduction.
Facts
The taxpayer is enrolled in a bridging course for overseas-trained professionals at an Australian University.
The taxpayer received a loan under the terms of the BOPTLS and makes repayments of the loan.
The course of study undertaken by the taxpayer will improve their skills and knowledge in their current field of employment and if successfully completed will lead to a future pay increase.
The taxpayer has incurred expenses associated with the course such as student fees, books and stationery.
Reasons for Decision
Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent that they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. However, a deduction will not be allowed where another provision of the ITAA 1997 specifically prevents it.
Paragraph 26-20(1)(c) of the ITAA 1997 specifically prevents a deduction for payments made to reduce a debt to the Commonwealth under Chapter 5A of the Higher Education Funding Act 1988 (HEFA). Chapter 5A of the HEFA governs the repayments of loans including those made under the BOTPLS (governed by Chapter 4B of the HEFA).
The taxpayer has made repayments of their loan under the BOTPLS. Paragraph 26-20(1)(c) of the ITAA 1997 operates to deny the taxpayer a deduction for the loan repayments. Therefore the taxpayer cannot claim a deduction in respect of the loan repayments under section 8-1 of the ITAA 1997.
Date of decision: 27 November 2002Year of income: Year ending 30 June 2003 Year ending 30 June 2004 Year ending 30 June 2005
Legislative References:
Income Tax Assessment Act 1997
section 8-1
paragraph 26-20(1)(c)
Chapter 4B
Chapter 5A Related ATO Interpretative Decisions
ATO ID 2002/463
ATO ID 2003/34
ATO ID 2003/35
Keywords
Higher Education Contribution Scheme
Education expenses
Self-education expenses
ISSN: 1445-2782
| Date: | Version: | |
| 27 November 2002 | Original statement | |
| You are here → | 25 July 2008 | Archived |