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Ruling

Subject: Education tax refund (ETR) - schooling requirement

Question 1

Is the schooling requirement of the ETR met for the first half of the income year in which your child left Australia to finish school overseas?

Answer

Yes

Question 2

Does your child who is finishing their schooling overseas meet the schooling requirement of the ETR for the second half of the income year onwards?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2011

Year ended 30 June 2012

The scheme commences on:

1 July 2010

Relevant facts and circumstances

Your child is finishing their schooling overseas.

This child left Australia in the first half of the relevant income year and is living with a relative while attending secondary school overseas.

You are fully funding your child while they are overseas.

Your child is a permanent resident of Australia.

Prior to leaving Australia, your child attended high school in Australia.

You receive Family Tax Benefit (FTB) Part A for your child who is finishing schooling overseas.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 61-610(1)

Income Tax Assessment Act 1997 Section 61-620

Income Tax Assessment Act 1997 Section 61-630

Reasons for decision

Summary

Your child was enrolled in, and attended, a secondary school course in Australia for at least one day in the first half of the income year in which they left Australia, so the schooling requirement of the ETR is met for every day in that six month period. However, the schooling requirement is not met for the second half of the income year onwards.

Detailed reasoning

Entitlement to education tax refund (ETR)

The ETR is a refundable tax offset for eligible education expenses incurred for a school student in your care, or for yourself if you are an independent student.

Subsection 61-610(1) of the Income Tax Assessment Act 1997 (ITAA 1997) outlines the requirements that must be satisfied to be entitled to the ETR in respect of another individual. It states that you are entitled to claim the ETR for an income year if:

· you are entitled to be paid FTB Part A for the individual on a day in the income year, and

· the individual satisfies the schooling requirement of the ETR on that day, and

· an eligible education expense for the individual's education is incurred on that day.

Schooling requirement

Section 61-630 of the ITAA 1997 states that in order to meet the schooling requirement of the ETR, an individual must be enrolled or registered in a course of study or instruction that is a primary or secondary course within the meaning of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act).

The GST Act defines a primary course as a course of study or instruction that is delivered:

· in accordance with a primary curriculum recognised by the education authority of the State or Territory in which the course is delivered, and

· by a school that is recognised as a primary school under the law of the State or Territory.

A secondary course is defined in the GST Act as:

· a course of study or instruction that is a secondary course determined by the Education Minister under the Student Assistance Act 1973, or

· any other course of study or instruction that the Education Minister has determined is a secondary course.

Under section 61-630 of the ITAA 1997, an individual satisfies the schooling requirement on every day in a six month period beginning on 1 July or 1 January if the individual was enrolled or registered in a primary or secondary school course and attended that course for at least one day in that six month period.

For example, for the 2010-11 year of income, if the student was enrolled or registered in a primary or secondary school course and attended that course for at least one day:

· from 1 July 2010 to 31 December 2010, then they met the schooling requirement for every day in that period

· from 1 January 2011 to 30 June 2011, then they met the schooling requirement for every day in that period

· in each of those two six-month periods, then they met the schooling requirement for the whole income year.

Your case

In your case, you receive FTB Part A for your child who is finishing secondary schooling overseas.

The school that your child attends overseas is not a primary or secondary school in a State or Territory of Australia. Your child is not being taught a primary curriculum recognised by the Education Department of a State or Territory in Australia, or a secondary course as determined by the Education Minister of Australia.

Prior to leaving Australia in the first half of the income year, your child attended high school in Australia. Therefore, as your child was enrolled in a secondary school course within the meaning of the GST Act and attended that course for at least one day in the first half of the income year, then the schooling requirement is met for every day in that six month period.

However, after the first half of the income year, your child was not enrolled in and did not attend a secondary course in Australia. Your child therefore does not meet the schooling requirement for the second half of the income year onwards.