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Edited version of your written advice
Authorisation Number: 1012873594217
Date of advice: 9 September 2015
Ruling
Subject: Self-education expenses
Question and answer
Are you entitled to a deduction for course fees financed by FEE Help?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2014
The scheme commenced on:
1 July 2013
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You were employed as a sales executive.
You undertook a post graduate diploma in business administration.
The post Graduate Diploma in Business Administration enhanced your skills and knowledge as a sales executive.
The diploma allowed you to gain important skills in qualitative and quantitative analytical skills.
The Diploma consisted of
• Leadership/Social Responsibility & Ethics
• Data Analysis
• Financial Accounting
• Financial Management
• Managerial Economics
• Managing People
• Marketing
And two of the following:
• Business strategy
• Global business economics
• Operations
Your course fees were paid under FEE-Help.
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 Income tax: deductibility of self-education expenses incurred by an employee or a person in business discusses circumstances in which self-education expenses are allowable as a deduction under section 8-1 of the ITAA 1997. If a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and the self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction.
In addition, 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.
However, the decision of the High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541 establishes the principle that no deduction is allowable for self-education expenses if the study is to enable the taxpayer to get employment, obtain new employment or to open up a new income-earning activity (whether in business or the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.
If a course of study is too general in terms of the taxpayer's current income-earning activities, the necessary connection between the self-education expenses and the income-earning activity does not exist.
In your case you were employed as a sales executive.
You undertook a graduate diploma in business Administration which enhanced your skills in qualitative and quantitative analysis, along with equipping you with skills to use in your day to day work.
The Commissioner is satisfied that there is sufficient connection between the skills and knowledge required in your position as a sales executive and the Graduate Diploma in Business Administration.
FEE-HELP
If you obtain a loan for all or part of the fees for your course under FEE-HELP, this does not preclude you from claiming a deduction for the expenses incurred in relation to the course. You are still entitled to a deduction under section 8-1 of the ITAA 1997 for expenses paid for the course, even though you may obtain a loan for your fees under FEE-HELP.
You have a loan under FEE-HELP for the cost of your Diploma.
You are entitled to a deduction for the costs of your course fees.