Edited version of your written advice

Authorisation Number: 1012922925899

Date of advice: 9 December 2015

Ruling

Subject: Self-education expenses

Questions and answers:

1. Are you entitled to a deduction for the student contribution charge in relation to a course of study you are undertaking?

No.

2. Are you entitled to a deduction for a payment to the Commonwealth to reduce a HECS-HELP debt?

No.

3. Is the services and amenities fees incurred in relation to a course of study you are undertaking an expense of self-education?

Yes.

This ruling applies for the following period:

1 July 20XX to 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances:

You are employed.

You are undertaking a Degree (the Degree) at a University.

The Degree is relevant to your current employment because it improves the skills and knowledge you require to do your job.

You were issued statements by the University indicating that:

• there was a student contribution charge for the subjects studied,

• you received HECS-HELP for the total amount of your student contribution charge and payment of that total amount has been deferred, and

• you incurred 'Services & Amenities' fees totalling less than $250.00.

Relevant legislative provisions:

Income Tax Assessment Act 1997 - Section 8-1

Income Tax Assessment Act 1997 - Paragraph 26-20(1)(ca)

Income Tax Assessment Act 1997 - Paragraph 26-20(1)(cb)

Income Tax Assessment Act 1997 - Section 82A

Higher Education Support Act 2003 - Chapter 3

Higher Education Support Act 2003 - Chapter 4

Reasons for decision

Expenses incurred in relation to a course of study may be deductible under the general deduction provisions of section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) provided the course of study has a relevant connection to a taxpayer's current employment and the amount is not prevented from being deducted by another provisions of the tax law.

Taxation Ruling TR 98/9 - Income tax: deductibility of self-education expenses incurred by an employee or a person in business notes that a course of study will generally be accepted as having a relevant connection to a taxpayer's current employment if it enables the taxpayer to maintain or improve skills or knowledge required in that employment.

HECS-HELP

Even though they may relate to a course of study that has a relevant connection to a taxpayer's current employment, section 26-20 of the ITAA 1997 provides that the following amounts cannot be deducted under the ITAA 1997:

• a student contribution amount within the meaning of the Higher Education Support Act 2003 (HESA) paid to a higher education provider (paragraph 26-20(1)(ca) of the ITAA 1997), and

• a payment made to reduce a debt to the Commonwealth under Chapter 4 of the HESA (paragraph 26-20(1)(cb) of the ITAA 1997).

HECS-HELP is granted to individuals under the provisions of the HESA for student contribution amounts and when granted, results in a debt to the Commonwealth under the provisions of Chapter 4 of the HESA.

Your student contribution charge from the University totalled $X. You received HECS-HELP for the full amount of your student contribution charge and payment of that amount has been deferred under HECS-HELP.

As the amount imposed was a student contribution charge you are prevented from deducting the amount by the provisions of paragraph 26-20(1)(ca) of the ITAA 1997.

In addition, under the provisions of paragraph 26-20(1)(cb) of the ITAA 1997, you cannot deduct any future payments to the Commonwealth that reduce your HECS-HELP debt.

Services and Amenities Part Time fee

As well as the above, any deduction that is available under section 8-1 of the ITAA 1997 for self-education expenses may be limited by the provisions of subsection 82A(1) of the Income Tax Assessment Act 1936 (ITAA 1936) which provides that only the net amount of 'expenses of self-education' above $250 can be deducted.

The term 'expenses of self-education' is defined in subsection 81A(2) of the ITAA 1936 as an expense 'necessarily incurred' by a taxpayer in connection with a prescribed course of education.

A prescribed course of education is defined in subsection 82A(2) of the ITAA 1936 to include a course of education given by a university and undertaken for the purpose of gaining qualifications for use in the carrying on of a profession or in the course of any employment.

The amounts excluded from deductibility by the provisions of section 26-20 of the ITAA 1997 (as discussed above) are also specifically excluded from the definition of 'expenses of self-education' by paragraphs 82A(2)(ba) and 82A(2)(bb) of the ITAA 1936 respectively. Accordingly, neither a student contribution charge, nor any payment made to the Commonwealth to reduce a HECS-HELP debt incurred in relation to a student contribution charge can be taken into consideration when determining the quantum of a taxpayer's 'expenses of self-education'.

Neither the student contribution charge nor any payment you make to the Commonwealth to reduce your HECS-HELP debt in relation to that charge, can be considered when determining the quantum of your 'expenses of self-education'.

The Degree qualifies as a prescribed course of education and it is considered the 'Services and Amenities Part Time' fees were 'necessarily incurred' by you in connection with the Degree. Consequently, those fees qualify as 'expenses of self-education', as defined in section 82A of the ITAA 1936.

Conclusion

You are not entitled to a deduction for your student contribution amount.

You are not entitled to a deduction for any payment to the Commonwealth to reduce your HECS-HELP debt in relation to your student contribution amount.

The 'Services and Amenities Part Time' fees is an expense of self-education.

Additional information

Generally, you have to reduce your deductible able self-education expenses by $250 in accordance with section 82A of the Income Tax Assessment Act 1936. However you may have other types of expenses some of which are not allowable as a deduction that can be offset against the $250 before you reduce the amount you can claim for allowable expenses. Further information on how to work out your self-education expenses is provided in paragraphs 119 to 155 of TR 98/9. This publication and ruling can be accessed by visiting our website at www.ato.gov.au. You can access a self-education expense calculator by searching for QC17744 on ATO.gov.au.