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Edited version of private advice
Authorisation Number: 1051767980826
Date of advice: 15 October 2020
Subject: Self education expenses
Are the tuition fees as part of Masters in Liberal Arts in Data Science you are undertaking deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?
This ruling applies for the following period:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You are employed as Research Associate at a University.
You hold the following qualifications:
· Bachelor Degree in technology (Electronics engineering).
· Master of Technology in VLSI System.
· PhD in Si based imaging and sensing devices.
You have commenced study of Masters in Liberal Arts in Data Science.
You will incur expenses for your studies.
Your employer will not contribute to these costs.
You are not eligible for a FEE-HELP loan.
You are concerned about your future employment status due to the current COVID-19 pandemic.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
Income Tax Assessment Act 1997 section 26-20
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.
The Commissioner's view on the deductibility of self-education expenses is contained in Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses. In accordance with TR 98/9, expenses of self-education will satisfy the requirements of section 8-1 of 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 case you are a Research Associate studying Masters in Liberal Arts in Data Science.
The study of Data Science does not have the relevant nexus with the derivation of your assessable income to be an allowable deduction.
While the subjects may be useful, they do not have sufficient connection in the derivation of your assessable income. Any connection they have to your assessable income is remote and incidental.
Accordingly you are not entitled to a deduction under section 8-1 ITAA 1997 for these expenses.
Whilst we acknowledge the current difficulties associated with the current COVID-19 pandemic and the subsequent hardships many taxpayers are enduring, this does not change the fact that in your circumstances the study you are undertaking does not connect to the derivation of your assessable income.
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