Edited version of your written advice

Authorisation Number: 1051362474745

Date of advice: 24 April 2018

Ruling

Subject: Self-Education

Question

Can you claim a deduction for self-education expenses?

Answer

Yes

This ruling applies for the following periods:

Year ending 30 June 2018

Year ending 30 June 2019

Year ending 30 June 2020

It is noted that you asked for the private ruling to apply for the 2017-18 income year and onwards. The Commissioner does not rule for indefinite periods as there may be changes to the facts of the arrangement or the law in question. Also, a public ruling may issue which affects the private ruling. Therefore, we have only ruled for the 2017-18 to 2019-20 income years.

The scheme commences on:

1 July 2017

Relevant facts and circumstances

You work as a Test Manager for xxxx.

You have enrolled in a Master of xxxx.

You are completing the study part-time and expect to complete by xxxx.

The subjects you are currently studying have been noted as part of your Ruling.

Your employer does not provide you any support to complete your study.

Your future subjects will be determined subject timetable and availability.

The course fees are determined by what subjects you select, but if study was completed full time the approximate cost would be xxxx.

You have incurred expenses for text books, laptop xxxx (part work/part study) and office chair approximate cost xxxx.

You are not required to complete this study by your employer.

Your employer does not provide you with any support to complete studies.

You are completing the studies to improve your knowledge and to provide a better service to clients.

You are paying your fees using FEE-HELP.

You have a current FEE-HELP debt of xxxx of which xxxx is for current studies.

In your current role as a test manager the Masters of xxxx studies will provide you with an understanding of the theory and concepts of computer systems, particularly ones used in enterprises that you work closely with and will enable you to implement effective test approaches.

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 98/9 (TR98/9) 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.

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 Master of xxxx will maintain and/or enhance the skills that are required in the performance of your current employment duties. Therefore the self-education expenses incurred have the necessary and relevant connection with the earning of your assessable income.

Course/Tuition Fees

The course and tuition fees can be claimed in the financial year in which the expense is incurred. FEE-HELP was introduced by the Commonwealth to provide assistance to students who are not supported by the Commonwealth to pay course fees. When you pay your course fees by FEE-HELP, you are entitled to deduct the expenses when they are originally incurred.

However you are not entitled to a deduction for the repayment of the FEE-HELP debt itself (Section 26-20 of the ITAA 1997).

Decline in Value

Paragraph 79 of TR 98/9 states you can deduct an amount for the decline in value of assets such as technical instruments and equipment, computers, calculators, professional libraries, filing cabinets and desks if the self-education satisfies the principles outlined in paragraph 13 and 14. You must reduce your deduction by the extent to which you use the asset for other than a taxable purpose.

Books, journals and stationery

Paragraph 87 of TR 98/9 states reference books and textbooks are generally used during the course of study and, in most cases, only in the year of purchase. In such circumstances, you can deduct the cost of the books under section 8-1 of the ITAA 1997. However, if you intend to use them for a number of years as reference material for income-earning purposes, you deduct an amount for the decline in value of the books under section 40-25 of the ITAA 1997. In some circumstances an immediate deduction for books costing $300 or less may instead be available by meeting the conditions in subsection 40-80(2) of the ITAA 1997 (see paragraph 82 TR98/9).

Summary

As you have met the requirements for eligibility for a deduction for self-education expenses, the course fees are deductible when it is incurred. However, as stated above, you are not entitled to claim a deduction for repayments of the FEE-HELP debt. The expenses incurred for the lap top, chair and text books are allowable self-education expenses.

For more information about what types of self-education expenses are deductible please refer to Taxation Ruling 98/9 at http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR989/nat/ato/00001.

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