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Ruling

Subject: self education expenses

Question

Are you entitled to a deduction for self education expenses that were incurred in the relevant financial year?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 2011

The scheme commences on:

1 July 2010

Relevant facts and circumstances

The arrangement that is the subject of the private ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are:

You are a recipient of social security and are employed part time.

You are studying a course full time.

You incurred expenses to complete this course.

You received financial support from the course provider as a lump sum payment to cover a portion of your expenses. You did not declare this income as assessable income.

The actual costs of the units completed were paid using HECS.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1.

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.

In order to satisfy the requirements of section 8-1 of the ITAA 1997, there must be a close and immediate connection between the income and the expenditure incurred. The expenditure must be incurred 'in the course of' gaining or producing the assessable income (Lunney v. Federal Commissioner of Taxation (1958) 100 CLR 478).

A recent High Court decision, Commissioner of Taxation v. Anstis (2010) 241 CLR 443; (2010) 76 ATR 735; 2010 ATC 20-221 (Anstis case), held that self-education expenses were deductible against Youth Allowance income.

In the Anstis case, the taxpayer was in receipt of Youth Allowance. In order for the taxpayer to receive these payments, she was required to satisfy the activity test and in satisfying that test she was required to be enrolled in a course of education at an educational institution, undertaking at least three quarters of the normal amount of full-time study in respect of the relevant course and enable the Secretary to form the opinion that she was making satisfactory progress towards completing the course. In satisfying these requirements, the taxpayer had incurred expenses (for example student administration fees, textbooks and computer depreciation) for which she claimed a deduction against the Youth Allowance income.

In your case, you incurred various self education expenses in the relevant financial year. During this period you were receiving a social security payment. Therefore, you are entitled to a deduction for the self education expenses incurred in the relevant financial year.

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