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Edited version of private ruling
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Ruling
Subject: Self education expenses
Are you entitled to a deduction for travel and other expenses associated with your study?
No.
This ruling applies for the following period
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
The scheme commenced on
1 July 2009
Relevant facts
You are a part time student.
You are a recipient of a scholarship that has tax deducted.
You are required to work a number of hours a week towards your studies.
You have incurred fuel expenses in travelling to and from university and internet expenses in pursuit of your studies.
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 TR 98/9 sets out the Commissioner's views on the circumstances in which self-education expenses are allowable as deductions. Paragraphs 13 & 14 of TR 98/9 provides the Commissioners view on where self education expenses will be considered deductible and states:
13. 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.
14. 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, the self-education expenses are allowable as a deduction.
Paragraph 18 of TR 98/9 states that self-education expenses are not deductible against payments made under various Commonwealth education assistance schemes, such as Austudy.
Paragraph 19 of TR 98/9 provides the rationale for this view. Its states:
19. The principles of deductibility discussed in paragraphs 13 and 14 above are not satisfied. Expenses incurred in fulfilling the course requirements are correctly characterised as expenses incurred in undertaking study that might enable the student to obtain employment in a particular field. The expenses are not incidental and relevant to the educational assistance payments.
In your case, your self education expenses relate to your study. You did not incur these expenses in order to earn your scholarship income. Therefore, they were not incurred in gaining or producing your assessable income, and so are not deductible under section 8-1 of the ITAA 1997. This is consistent with the approach taken in TR 98/9 with regards to various Commonwealth education assistance schemes.