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Edited version of your written advice
Authorisation Number: 1012827843149
Date of advice: 23 June 2015
Ruling
Subject: Deductibility of self-education expenses incurred
Question 1
Are you entitled to a deduction for self-education expenses that you incurred in studying a degree whilst you were employed with a financial services company?
Answer
Yes.
Question 2
Are you entitled to a deduction for self-education expenses that you incurred in studying a degree whilst you are employed with a organisation?
Answer
Yes.
This ruling applies for the following periods:
Year ending 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
The scheme commences on:
1 July 2014
Relevant facts and circumstances
Sometime in the 20WW-XX income year you commenced employment with a financial services company.
Sometime in the 20XX-YY income year you commenced studying a degree at a University. You obtained a fee-help loan for your tuition.
You commenced studying two units in trimester 2 and you incurred fee-help fees during this trimester.
You resigned from the financial services company sometime later.
Prior to your resignation from the financial services company, you were offered a position in another organisation. You commenced working in this organisation sometime during the 20XX-YY income year.
You did not continue your study during trimester 3.
You again commenced University study in trimester 1.
During this trimester you are studying two units and have incurred fees.
The course does not allow for elective units outside the study of your specific degree. Therefore, all your future study in this course will be focused around this degree.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
Work- related expenses generally fall for consideration under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). This section allows a deduction for losses and outgoings which are incurred in the course of gaining or producing assessable income, unless the losses or outgoings are of a capital, private or domestic nature.
The Commissioner's view on the deductibility of self-education expense is contained in Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses. In accordance with TR 98/9, expenses incurred in relation to self-education will satisfy the requirements of section 8-1 of the ITAA 1997 if:
• a taxpayer's income-earning activities are based on the exercise of a skill or some specific knowledge, and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge (FC of T v. Finn (1961) 106 CLR 60;(1961 12 ATD 348) (Finn's Case); or
• 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 their current income earning activities in the future (FC of T v. Hatchett (1971) 125 CLR 494; 71ATC 4184; (1971) 2ATR 557 (Hatchett's Case).
Therefore, 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.
In your situation, it is considered that you studying a degree would have improved your skills and knowledge in respect of your employment with the financial services company and will continue to do so during your employment with the other organisation. Furthermore, your study is likely to lead to an increase in your income earning activities with the organisation.
Accordingly, there is a sufficient nexus between your study and your income earning activities and a deduction for the self-education expenses that you have incurred is allowed.
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