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Edited version of your written advice
Authorisation Number: 1013096053943
Date of advice: 5 October 2016
Ruling
Subject: Work related self-education expenses.
Question 1
Can you claim a deduction in the 20XX-YY financial year for university fees paid in connection with a self-education course?
Answer
Yes - but only to the extent that you have not been reimbursed.
Question 2
Can you claim a deduction in the 20YY-ZZ financial year for university fees paid in connection with a self-education course?
Answer
Yes - but only to the extent that you have not been reimbursed.
This ruling applies for the following periods:
Year ending 30 June 20YY
Year ending 30 June 20ZZ
The scheme commences on:
01 July 20XX
Relevant facts and circumstances
You are employed and have worked full time since 20WW.
You commenced an unpaid leave of absence in 20YY which will continue for 12 months.
You have enrolled in a course ('the course') at an overseas university.
The course commences in 20YY for a 12 month period.
After the course you will recommence your full time employment with your employer.
You will receive a maximum financial contribution from your employer of X$Z. This is a bonded taxable scholarship.
A letter provided from your employer states that:
'This proposed course of study will be highly beneficial for the ongoing work'
You were also awarded a scholarship in the amount of $Y to help support your studies in the 20YY-ZZ financial year. The scholarship is granted in the form of a tuition credit, divided equally over the three academic quarters.
You will also receive a third party Scholarship. You will receive $X per annum for each year of the scholarship period.
You prepaid some course fees in the 20YY financial year.
You will incur travel, accommodation and further course fees in the 20ZZ financial year.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
Income Tax Assessment Act 1997 section 51-10
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).
You can claim a deduction for self-education expenses if, in doing the course, you are satisfying study requirements to maintain your right to a taxable bonded scholarship. If you are employed by the scholarship provider, normal work-related self-education rules apply.
In this case you are in receipt of a taxable bonded scholarship from your employer. As discussed above, the normal work-related self-education rules will apply. We accept that the position description for your current role and the course outcomes align significantly. The course maintains and improves skills and specific knowledge that you exercise in your current income earning capacity.
It is considered that the study will maintain or improve your skill or knowledge used in your current income earning activity. Consequently you are entitled to a deduction for the course fees incurred.
However, the total expenditure outlaid for eligible self-education expenses should first be reduced by any reimbursement of fees or other items received by you but not included in the your assessable income. No deduction is allowed if the amount of the expense is fully reimbursed.
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