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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your written advice

Authorisation Number: 1051270227910

Date of advice: 21 August 2017

Ruling

Subject: Self-education expenses

Question:

Will your self-education expenses be deductible?

Answer:

Yes.

This ruling applies for the following period(s)

Year ending 30 June 2017

Year ending 30 June 2018

Year ending 30 June 2019

Year ending 30 June 2020

The scheme commences on

1 July 2016

Relevant facts and circumstances

You are employed full time as a Project Manager.

You commenced a relevant Master’s Degree on X, to directly develop skills required in your current role and improve your ability to perform your work.

Completion of the degree will lead to increased income in this role.

Your employer has provided you with study assistance of up to $ annually upon completion of subjects, # days study leave and $ for expenses (exam, textbooks and reading materials).

The balance of your degree is covered by FEE-HELP.

You are likely to incur expenses including tuition, materials and travel (if overseas study is pursued).

At the end of the study you expect to be in your current role or a similar role with expanded responsibility.

The duties you are required to undertake your current employment include:

The subjects and electives of the Degree are listed.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1936 Section 82A

Income Tax Assessment Act 1997 Section 26-20

Reasons for decision

Section 8-1 of the 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 sets out the circumstances in which self-education expenses are allowable as deductions. No deduction is allowed if the study is to enable a taxpayer to obtain new employment or to open a new field of income-earning activity.

The relevant course will enable you to improve and supplement your existing management skills. The relevant course will improve your ability to perform your work and may improve your chances of advancement within the company.

The expenses incurred in undertaking the relevant course have the necessary connection with your assessable income and are deductible under section 8-1 of the ITAA 1997.

As the expenses incurred in undertaking the Masters degree course also fall within the definition of 'expenses of self-education' in section 82A of the ITAA 1936, the section operates to limit the amount of expenses otherwise allowable under subsection 51(1) of the ITAA 1936 and section 8-1 of the ITAA 1997. Where section 82A of the ITAA 1936 applies, only the excess of the self-education expenses over $250 may be considered for deduction under subsection 51(1) of the ITAA 1936 and section 8-1 of the ITAA 1997. However, before performing this calculation, the total of the self-education expenses must be reduced by any reimbursement of fees or other items received by the taxpayer but not included in the taxpayer's assessable income.

Section 26-20 of the ITAA 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.

Accordingly, as you meet the requirements of eligibility for a deduction of self-education expenses and are a part-fee paying student; then a deduction for the course fees (that are payable by you) can be claimed in the financial year in which the expense is incurred. For example, course fees for study undertaken in the period July to December 2017 and January to June 2018 are claimable in the 2017-18 financial year.

However, the loan fee or loading amount, which may be up to 25% of your course fee and added to your fees, is not claimable.

In your case, you have stated that your study is directly related to your current income-earning activity. Therefore, the course fees are deductible in the year in which they were incurred even though they were paid under the FEE-HELP system.

The repayments you make to the Australian Government on your FEE-HELP debt are not an allowable deduction.

The expenses you have incurred for textbooks, technology and public transport are allowable self-education expenses.

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