ATO Interpretative Decision
ATO ID 2001/43 (Withdrawn)
Income Tax
Deductions and expenses: Self Education Expenses (Postgraduate Study Overseas)FOI status: may be released
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This ATO ID is withdrawn from the database as it is superseded by Taxation Ruling TR 98/9.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Whether expenses incurred in undertaking a postgraduate course of study at an overseas university by a lawyer are an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997.
Decision
The expenses incurred by the taxpayer in undertaking the course of study are not deductible under section 8-1 of the Income Tax Assessment Act 1997.
Facts
A taxpayer is qualified as a lawyer. Having ceased employment with a law firm, the taxpayer applies to undertake a postgraduate course of study in law at an overseas university in order to improve the taxpayer's professional knowledge and skills in the law. In attending the course, the taxpayer incurs a number of expenses such as course fees, union fees, application fees, airfare costs, and material costs. The taxpayer intends to continue to work in the field of law upon completing the course.
Reasons For Decision
The expenses incurred by the taxpayer in undertaking the course of study are not sufficiently related to the earning of assessable income to be described properly as having been incurred in the course of gaining or producing that income as the taxpayer is in between jobs during the duration of the course (FC of T v Klan 85 ATC 4060; 16 ATR 176). Taxation Ruling TR 98/9 sets out the Commissioner's views on the circumstances in which self-education expenses are allowable as deductions. The Ruling states that where there is a break in employment, the expenses will generally be incurred at a point too soon to be regarded as incurred in gaining or producing income, and will therefore not qualify for deduction under section 8-1 of the Income Tax Assessment Act 1997.
The expenditure incurred is more properly characterised as expenditure incurred for the purposes of obtaining a new position (FC of T v Klan 85 ATC 4060; 16 ATR 176). Such expenses are incurred at a point too early in time to be deductible, (FC of T v Maddalena 71 ATC 4161; 2 ATR 541).
Date of decision: 15 June 1998
Legislative References:
Income Tax Assessment Act 1997
section 8-1
Case References:
Lunney & Hayley v FC of T
(1958) 100 CLR 478
(1949) 78 CLR 47 FC of T v Finn
(1961) 106 CLR 60 FC of T v Klan
85 ATC 4060
16 ATR 176 FC of T v MI Roberts
92 ATC 4787
24 ATR 479 FC of T v Maddalena
71 ATC 4161
2 ATR 541
Related Public Rulings (including Determinations)
TR 98/9
Keywords
Overseas education expenses
Self education expenses
ISSN: 1445-2782
| Date: | Version: | |
| 15 June 1998 | Original statement | |
| You are here | 25 July 2008 | Archived |