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Edited version of private advice
Authorisation Number: 1012635699217
Ruling
Subject: Self-education expenses
Question 1
Are you entitled to a deduction for self-education expenses relating to a course?
Answer
Yes.
Question 2
Is the deduction for self-education still allowable where all of the course fees are paid using a FEE-HELP loan?
Answer
Yes.
This ruling applies for the following periods:
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commences on:
1 July 2012
Relevant facts and circumstances
For a number of years you were employed as a department coordinator, and worked as a supervisor when your supervisor was unavailable.
During this period you commenced the course at an Australian university. After completing a number of units of the course you were appointed in the position of manager.
To be accepted into the course, you were required to submit two referee reports, you needed a minimum of two years relevant professional work experience, and a minimum one year supervisory/management experience.
As a coordinator you were required to perform supervisory type duties for the staff in your area, as well as a number of departmental administrative functions.
The subjects which are a part of the course cover supervisory and management issues.
You are not being reimbursed for expenses incurred for the course.
You were not asked to commence the course by your superiors.
The course is being financed using FEE-HELP loan.
You are encouraged to share your work with your managers where you complete assessments with your profession as the subject.
You have not applied for study leave so the majority of your study occurs in your own time.
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.
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 (Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348).
In your case, it is accepted that the course maintained or enhanced the skills that were required in the performance of your employment duties at the time the course was undertaken. Consequently the self-education expenses incurred have the necessary and relevant connection with the earning of your assessable income and are therefore deductible under section 8-1 of the ITAA 1997.
FEE-HELP
You have incurred the tuition expenses through FEE-HELP, which was introduced by the Commonwealth to provide assistance to students who are not supported by the Commonwealth to pay course fees. As you have met the requirements for eligibility for a deduction for self-education expenses, the whole course fee is deductible. However, you are not allowed a deduction under section 26-20 of the ITAA 1997 for the repayment of FEE-HELP debt.
Limit to the deductibility of self-education expenses
In certain circumstances you may have to reduce your allowable self-education expenses by $250. 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 in TaxPack and paragraphs 119 to 155 of TR 98/9. This publication and ruling can be accessed by visiting our website at www.ato.gov.au.
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