Edited version of your written advice

Authorisation Number: 1012988606028

Date of advice: 23 March 2016

Ruling

Subject: The deductibility of self-education expenses

Question 1

Are you entitled to claim a deduction for your self-education expenses consisting of course fees paid by using FEE HELP to pay all or part of your tuition fees?

Answer

Yes

This ruling applies for the following period(s)

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

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 employed full time as a Geologist for a Company.

Your role includes:

• Geological targeting and analysis of projects combining geological and economic criteria

• Management of project teams

• Leadership and supervision of small to medium teams for field operations

• Management of project finance, budget, programme and quality

• Project appraisal

You plan to enrol as a part time student in a Graduate Diploma course.

The course will further develop your skills in the areas of project managing work by having a stronger business knowledge base with a stronger economic background to assess the feasibility of gold or other mineral deposits. By providing you with greater insight into project and financial management it 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.

The Graduate Diploma course has a significant focus on growing management and leadership skills which will build on your ability to provide a stable, functioning and team environment.

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

You will use FEE-HELP to assist you in paying the course fees and are funding your own education expenses.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Section 26-20

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.

In your case, it is accepted that the Graduate Diploma 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/FEE-HELP

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.

The tuition fee can be claimed in the financial year in which the expense is incurred. FEE-HELP and VET FEE-HELP was introduced by the Commonwealth to provide assistance to students who are not supported by the Commonwealth to pay course fees. When you pay your course fees by VET FEE-HELP, you are entitled to deduct the expenses when they are originally incurred (subject to the below deductibility tests).

However you are not entitled to a deduction for the repayment of the VET FEE-HELP debt itself (Section 26-20 of the ITAA 1997).

As you have met the requirements for eligibility for a deduction for self education expenses, the whole course fee is deductible when it is incurred. However, as stated above, you are not entitled to claim a deduction for repayments of the VET FEE-HELP debt.

Other relevant comments

Limit to the deductibility of self education expenses

In certain circumstances you may have to reduce your allowable self education expenses by $250. 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. For more information search for quick code (QC) 16918 at www.ato.gov.au.

Pre requisites for deductions

The deductibility of any work related expenses are subject to the substantiation rules as outlined in Division 900 ITAA1997.

Documentation satisfying the requirements of section 900-15 or 900-120 of the ITAA 1997 is required to substantiate the expenses included in these claims.

Pursuant to sections 900-115 or 900-120 of the ITAA 1997, these expenses must be substantiated by a document setting out the following:

• the name or business name of the supplier of the goods or service, or asset

• the amount of the expense, or the cost of the asset

• the nature of the goods or service, or asset

• the day the expense was incurred, or asset was acquired, and

• the day the document was made out.