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Edited version of your written advice
Authorisation Number: 1012884977724
Date of advice: 27 October 2015
Ruling
Subject: Self-education expenses
Question 1:
Are you entitled to a deduction for course fees?
Answer:
No
Question 2:
Are you entitled to a deduction for the unreimbursed amount of student services and amenities fees and text book expenses?
Answer:
Yes
This ruling applies for the following periods:
Year ended 30 June 2014
Year ended 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
Year ending 30 June 2018
Year ending 30 June 2019
The scheme commenced on:
1 July 2013
Relevant facts
You are employed in a position with management responsibilities.
You are undertaking a management course specialising in the industry in which you are employed.
Your employer has agreed to pay a portion of the associated costs of the course if they will not be liable to pay fringe benefits tax (FBT).
You have a Commonwealth Supported Place in the course and pay your course fees through HECS-HELP.
Your employer has provided you with study leave if you require it.
On completion of the course you will not change your position or receive an increase in your salary from your employer.
You have made repayments to the government under the HECS-HELP scheme.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
Income Tax Assessment Act 1997 section 26-20
Income Tax Assessment Act 1936 section 51AH
Income Tax Assessment Act 1936 section 82A
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, relate to the earning of exempt income or are excluded by another provision of the taxation legislation.
Taxation Ruling TR 98/9 discusses the deductibility of self-education expenses. Paragraph 13 of TR 98/9 states:
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.
In your case, it is accepted the course you will study will maintain or enhance the skills that are required to perform in your current employment duties. Consequently, the self-education expenses incurred in undertaking the course have the necessary and relevant connection with the earning of your assessable income. However, section 26-20 of the ITAA 1997 operates in most instances where domestic students undertake an undergraduate university course to deny a deduction in relation to the course fees.
Students who have a Commonwealth Supported Place are required to pay a student contribution amount for their units of study. The Higher Education Support Act 2003 essentially gives students two options for making payment for a designated course of study. One is to pay up front to the institution and the other is to defer the payment and pay through the income tax system.
While other self-education expenses may be tax deductible, the student contribution that Commonwealth supported students make to their higher education institution is never tax deductible. This is the situation whether the student pays their contribution upfront or defers the payment under HECS-HELP. Section 26-20 of the ITAA 1997 specifically prevents the deduction
As you have a Commonwealth Supported Place in the course, your course fees are not deductible.
The student services and amenities fees and the cost of the text books you incur are deductible under section 8-1 of the ITAA 1997. However, the amount you can claim must be reduced by any reimbursement you receive from your employer (section 51AH of the Income Tax Assessment Act 1936).
$250 reduction
The self-education expenses you can deduct may be subject to a reduction of up to $250 in accordance with section 82A of the Income Tax Assessment Act 1936. An explanation on how this provision operates is provided at paragraphs 119 to 155 of TR 98/9, which can be accessed on our internet website at www.ato.gov.au .