Edited version of your written advice

Authorisation Number: 1012977531636

Date of advice: 29 February 2016

Ruling

Subject: Deductibility of self-education expenses

Question 1

Are you entitled to claim a deduction for your eligible self-education expenses such as course fees and text books?

Answer

Yes

This ruling applies for the following period(s)

Year ended 30 June 20ZZ

Year ended 30 June 20YY

The scheme commences on

1 July 20XX

Relevant facts and circumstances

The arrangement that is the subject of the private ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are:

• the application for private ruling,

• Further information received via email

You are currently employed full time as a project officer in your employment field and site executive and are studying a flexible hours, Master's degree with a specialisation in resource management at a learning institution.

You commenced your study in late 20XX and expect to graduate in mid-20YY.

You will be undertaking the study in subjects including:

• Project management

• Mergers and acquisitions

• Valuation and risk management for Resource Companies

• Business management

The course will provide the opportunity to further develop your skills in the areas of project managing work, personnel and stakeholder management, management of technical projects, business ethics, inspiring commitment and trust, strategic thinking and presentation skills. You currently require these skills in your present position and will further enhance your skills and competency allowing you to improve your current skills and lead to an increase in future income in your present position.

Your employer has approved paid leave for select certain subjects that you could not complete in your own time.

You are not receiving any reimbursement or allowance from your employer towards your course of study.

You are funding your own education expenses.

You will incur the following expenses:

• Tuition fees

• Text books

You will be maintaining your current home in a state of Australia and completing your studies with your learning institution located close to your home.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Section 900-115

Income Tax Assessment Act 1997 Section 900-120

Reasons for decision

Work-related self-education expenses

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 to the extent to which they are of a capital, private or domestic nature, or relate to the earning of exempt income.

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.

Thus, self-education expenses incurred by a taxpayer will qualify for deduction under section 8-1 of the ITAA 1997, if there is a sufficient nexus to the production of assessable income and the improvement of a skill or some specific knowledge.

Similarly, 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, a deduction is allowable.

Paragraph 23 of TR 98/9 states that subject to the general tests under section 8-1 of the ITAA 1997 being met, the following types of expenses relating to approved self-education are allowable deductions;

• course or tuition fees of attending educational institutions, conferences or seminars

• the cost of professional and trade journals, text books and stationery

• airfares incurred on overseas study tours, on work-related conferences or seminars, or attending educational institutions

• where a taxpayer is away from home overnight or temporarily, accommodation and meal expenses incurred on overseas study tours, conferences or seminars, or attending an educational institution

In your case, it is accepted that the Masters course will maintain or enhance the skills that are required in the performance of your current role. Consequently, the self-education expenses incurred have the necessary and relevant connection with the earning of your assessable income. You are therefore entitled to a deduction under section 8-1 of the ITAA 1997 for self-education expenses.

Course fees

You have demonstrated that the course of education has a nexus to your current employment. Therefore, as outlined in TR 98/9 you are allowed a deduction for your course fees incurred in attending an educational institution under section 8-1 of the ITAA 1997.

Books

Reference books and textbooks are generally used during the course of study and, in most cases, only in the year of purchase. In such circumstances, you can deduct the cost of the books under section 8-1 of the ITAA1997. However, if you intend to use them for a number of years as reference material for income-earning purposes, you deduct an amount for the decline in value of the books under section 40-25 of the ITAA 1997.

Additional information

Please note that 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 the ATO website at www.ato.gov.au.