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Ruling

Subject: Self-education expenses - HELP

Question

Are you entitled to a deduction for the HELP debt you have incurred?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2010

Year ended 30 June 2011

The scheme commenced on:

1 July 2009

Relevant facts and circumstances

You are employed.

You were required to complete part of a course prior to being employed by your employer.

In 2009 you were employed as a Trainee. At this time you completed the remainder of the course by distance education.

You incurred a HELP debt in relation to the course from 2009.

The course forms part of the traineeship and enabled you to improve specific skills and knowledge you would require in your employment.

You were required to complete the course to maintain your employment.

Upon completion of the course your income and qualifications increased.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1 and

Income Tax Assessment Act 1997 Subsection 26-20(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. A deduction will not be allowed under section 8-1 of the ITAA 1997 where another provision of the ITAA 1997 specifically precludes it.

Self-education expenses generally fall under consideration of section 8-1 of the ITAA 1997. To be deductible under section 8-1 of the ITAA 1997 an expense must have the essential character of an expense incurred in gaining or producing assessable income or, in other words, of an income-producing expense.

Section 87-1 of the Higher Education Support Act 2003 provides that:

A student may be entitled to HECS-HELP assistance for units of study for which he or she is Commonwealth supported, if certain requirements are met. The amount of assistance to which the student may be entitled is based on his or her student contribution amounts for the units, less any up-front payments. The assistance is paid to a higher education provider to discharge the student's liability to pay his or her student contribution amounts.

Subsection 26-20(1) of the ITAA 1997 prevents a deduction for certain assistance provided to students. You cannot claim a deduction for:

§ a student contribution amount within the meaning of the Higher Education Support Act 2003 paid to a higher education provider

§ a payment made to reduce a debt to the Commonwealth under Chapter 4 of that Act

In your case, you completed a course while being employed that increased your skills and lead to an increase in income. We accept that the self education has the necessary and relevant connection with the earning of your assessable income. However, the student contribution amounts for which you accrued a HELP debt were paid to your higher education provider.

Accordingly, you are not allowed to claim a deduction in respect of your HELP debt under section 8-1 of the ITAA 1997 as section 26-20 of the ITAA 1997 specifically prevents the deduction.