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Edited version of your written advice

Authorisation Number: 5010050972324

Date of advice: 19 July 2018

Ruling

Subject: Self-education Expenses

Question

Is the cost of undertaking an MBA course deductible under Section 8-1 of the Income tax Assessment Act?

Answer

Yes

This ruling applies for the following periods:

Year ended 30 June 20xx

Year ended 30 June 20xx

Year ended 30 June 20xx

The scheme commences on:

1 July 20xx

Relevant facts and circumstances

You are an Australian resident for tax purposes.

You are currently employed as a general manager.

Your current employer has stated that they believe completing the course will likely enhance your skills in your current position. In addition as the company expands the qualifications would assist in your role within the expanded business.

Your current employment description includes a number of responsibilities relating to your MBA’s listed course subjects such as the following:

Your employer has stated they will assist you with the following:

You will be enrolled in a Master of Business Administration commencing in in the second part of 20xx and finishing December 20xx.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1936 section 82A

Reasons for decision

Reasons for decision

Summary

The self-education expenses, including course fees, incurred in undertaking this program have the necessary and relevant connection with the earning of your assessable income and are deductable under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997).

Detailed reasoning

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 (TR 98/9) provides the Commissioner’s view for the circumstances under which self-education expenses are allowable as a deduction.

TR 98/9 provides that 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).

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.

Application to your circumstances

You will be undertaking a course in Master of Business Administration including subjects in executive leadership, business strategy, Innovation, global marketing and networking for use in carrying on your income earning activities as a general manager.

In your case, there is sufficient connection between the courses you will be completing and your income producing activities at the time as stated by your employer. You will undertake the course to enhance your existing capabilities, skills and knowledge that are required in the performance of your current employment as a general manager.

Consequently, the self-education expenses, including course fees, incurred in undertaking this course that have the necessary and relevant connection with the earning of your assessable income and are deductable under section 8-1 of the ITAA 1997.

Additional information

In certain circumstances you may have to reduce your allowable self-education expenses by $250. However you may have other types of expenses some of which are not allowable as a deduction that can be offset against the $250 before you reduce the amount you can claim for allowable expenses.

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