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Edited version of your written advice
Authorisation Number: 1051342036245
Date of advice: 23 February 2018
Ruling
Subject: Self-education expenses
Question
Are you entitled to claim a deduction for your eligible self-education expenses?
Answer
Yes
This ruling applies for the following period:
Year ended 30 June 2018
Year ended 30 June 2019
Year ended 30 June 2020
The scheme commences on:
1 July 2017
Relevant facts and circumstances
1. You are employed in a professional field.
2. Currently, the majority of the income you derive is from professional work. The remaining fees are derived from sitting on boards, preparing papers, and other minor consultancy work.
3. You intend to make a shift in your sources of income by reducing the amount of professional work performed, and increasing the income currently derived from other sources which are more managerial and consultancy-based.
4. To do this, you intend to apply for positions for more consultancy work and to sit on more boards.
5. You believe this income stream will be greatly enhanced if you obtain a Masters of Business Administration (MBA).
6. The course is specifically tailored to develop the skills and necessary capabilities to take up leadership roles and enhances ability to move towards administrative and advisory work.
7. It is expected that the course will be completed in 18 months.
8. You will pay the fees to obtain this qualification.
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 to the extent to which they are of a capital, private or domestic nature, or relate to the earning of exempt income.
Taxation Ruling TR 98/9 discusses the deductibility of self-education expenses. Paragraph 13 of TR 98/9 states:
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, the self-education expenses are allowable as a deduction.
Thus, self-education expenses incurred by a taxpayer will qualify for deduction under section 8-1 of the ITAA 1997, if there is a sufficient nexus to the production of assessable income and the improvement of a skill or some specific knowledge.
Similarly, if 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 his or her current income earning activities in the future, a deduction is allowable.
In your case, it is accepted that the Masters of Business Administration course will maintain or enhance the skills that are required in the performance of your current role. Consequently, the self-education expenses incurred have the necessary and relevant connection with the earning of your assessable income. You are therefore entitled to a deduction under section 8-1 of the ITAA 1997 for eligible self-education expenses
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