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Ruling
Subject: Self-education expenses
Question
Are you entitled to a deduction for self-education expenses?
Answer:
Yes.
This ruling applies for the following periods:
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
The scheme commences on:
1 July 2011
Relevant facts and circumstances
You are a Barrister.
Your practice includes Criminal Law, Family Law, Civil Law and Commercial Law.
You have commenced a post graduate degree in one of those areas of law.
You have taken out a FEE-HELP loan to pay your tuition fees.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1 and
Income Tax Assessment Act 1997 section 26-20.
Reasons for decision
Taxation Ruling TR 98/9 discusses the circumstances under which self-education expenses are allowable as a deduction. A deduction is allowable for self-education expenses if a taxpayer's current income earning activities are based on the exercise of a skill or some specific knowledge and the subject of the self-education enables the taxpayer to maintain or improve that skill or knowledge.
Similarly, if the study of a subject of self-education objectively leads to, or is likely to lead to an increase in a taxpayer's income from his or her current income earning activities in the future, a deduction is allowable.
Section 26-20 of the Income Tax Assessment Act 1997 outlines the availability of deductions in respect of certain student assistant programs. There is nothing in this section or any other taxation provision that precludes a deduction for course fees incurred where a taxpayer has obtained a loan for all or part of the fees for the course under FEE-HELP.
In your case, you work as a Barrister and are undertaking a postgraduate course in an area of law that you are currently practising in. It is accepted that the course will enhance the skills required in the performance of your work. The expenses incurred for course fees have the necessary and relevant connection with the earning of your assessable income. The FEE-HELP loan you obtained for your course fees does not prevent you from claiming a deduction for your expenses. Therefore, you are entitled to a deduction for self-education expenses.
Limit to the deductibility of self-education expenses
In certain circumstances you may have to reduce your allowable self-education expenses by $250 in accordance with section 82A of the Income Tax Assessment Act 1936. However you may have other types of expenses some of which are not allowable as a deduction that can be offset against the $250 before you reduce the amount you can claim for allowable expenses. Further information on how to work out your self-education expenses is provided at paragraphs 119 to 155 of TR 98/9. This ruling is available on the Tax Office website: www.ato.gov.au.
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