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Edited version of private advice
Authorisation Number: 1051681008385
Date of advice: 20 May 2020
Subject: Self-education expenses
Are you entitled to claim a deduction for self-education expenses?
This ruling applies for the following period:
Income year ended 30 June 2018
Income year ended 30 June 2019
Income year ending 30 June 2020
The scheme commences on:
1 July 2017
Relevant facts and circumstances
You are employed by the Government with a Department. You have been in this role since 20XX. Your responsibilities include management for all projects over a certain construction value in the Department.
In 20XX your job altered to include a new responsibility. As part of your job you are now required to apply for the approval for each of the Department's new projects and ensure the projects meets the legal requirements and then report on the projects externally and internally.
You are undertaking a Master's degree at a University. You state that the Master's course relates directly to your current job by enabling you to have the knowledge to ensure that you can complete the new responsibilities component of your current role. In addition. You state that the Master's degree will assist your career progression by the following:
- You can apply for higher positions with higher salaries.
- In order to progress your career from your current level, positions advertised in either the private or government sectors require a Master's degree as either highly desirable or essential.
- This is essential as almost always required by large multinational companies and international companies.
You have supplied a copy of your academic transcript from the University which records the units you have undertaken in 2017, 2018 and 2019 all as part of a Master's degree.
You have used FEE-HELP scheme for your university tuition fees.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Income Tax Assessment Act 1936 Section 82A
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which 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.
The Commissioner's view on the deductibility of self-education expenses is contained in Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business. The ruling explains that, provided there is sufficient connection between a course of self-education and current income earning activities, you are entitled to claim a deduction for your self-education expenses.
However, as stated in paragraph 15 of TR 98/9, such expenses will not be deductible if the study is intended to:
- Enable you to get employment.
- Enable you to obtain new employment.
- Open up a new income-earning activity (whether in business or in your current employment).
In your case it is not considered to be opening up a new income-earning activity as you are completing the master's degree in order to assist your current job as well as allowing you to obtain promotion on your current line of work.
You are entitled to claim a deduction under section 8-1 of the ITAA 1997 for expenses you incurred for the course fees as the expenses directly relate to your current income earning activities, even though you have obtained a loan for the payment of those fees under FEE-HELP.
The deduction is claimed in the income year in which the expense is occurred, that is, when a you are liable for the expense. This is the time the costs are incurred by you and therefore, the date on the university's invoice is the date used when claiming these expenses.
The payments of FEE-HELP are re-payments of a loan used to pay the fees and are not deductible.
It is accepted that your Master's degree will maintain or enhance the skills that are required in the performance of your employment. Your self-education expenses are considered to have the relevant connection to your current income earning activities. Therefore, expenses incurred in relation to your Master's course, including the course fees, are considered allowable as a deduction under section 8-1 of the ITAA 1997.
Limitation on deductibility of expenses
Section 82A of the Income Tax Assessment Act 1936 operates to limit the amount of self-education expenses otherwise allowable under section 8-1 of the ITAA 1997. Only the excess of the self-education expenses over $250 may be considered for deduction under section 8-1. Therefore, your claims will need to be reduced by $250 for each income year that you make a claim for self-education expenses.