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Edited version of your written advice
Authorisation Number: 1051234430466
Date of advice: 8 June 2017
Ruling
Subject: Self-education expenses
Question
Will your self-education expenses be deductible?
Answer
Yes.
This ruling applies for the following period(s)
Year ending 30 June 2018
Year ending 30 June 2019
The scheme commences on
1 July 2017
Relevant facts and circumstances
You are currently employed in a management role.
You are planning to complete an online Master of Business Administration (MBA).
Your duties as a branch manager include:
● Daily management of staff and branch
● Staff recruitment
● Implementation of policies and procedures
● Key account manager
● Business development
● Quoting new and existing business
● Business analysis
● Software development analysis
● Overseas office transition
● Tender management
● Project management
The subjects you are required to complete for the MBA include:
● Corporate governance
● Financial management
● Leadership
● Marketing management
● Operations management
● Strategic management
You are looking at paying your fees using FEE-HELP.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
Income Tax Assessment Act 1936 Section 82A
Income Tax Assessment Act 1997 Section 26-20
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 sets out the circumstances in which self-education expenses are allowable as deductions. No deduction is allowed if the study is to enable a taxpayer to obtain new employment or to open a new field of income-earning activity.
The MBA course will enable you to improve and supplement your existing management skills. The MBA will improve your ability to perform your work and may improve your chances of advancement within the company.
The expenses incurred in undertaking the MBA course have the necessary connection with your assessable income and are deductible under section 8-1 of the ITAA 1997.
Self-education expenses that are allowable under section 8-1 of the ITAA 1997 and relate to a 'prescribed course of education', are limited in deductibility by subsection 82A of the Income Tax Assessment Act 1936 (ITAA 1936) to the net amount of self-education expenses that exceeds $250.
Section 26-20 of the ITAA 1997 outlines the availability of deductions in respect of certain student assistant programs. There is nothing in this section or any other taxation provision that precludes a deduction for course fees incurred where a taxpayer has obtained a loan for all or part of the fees for the course under FEE-HELP.
Accordingly, as you meet the requirements of eligibility for a deduction of self-education expenses and are a full-fee paying student; then a deduction for the course fees can be claimed in the financial year in which the expense is incurred. For example, course fees for study undertaken in the period July to December 2017 and January to June 2018 are claimable in the 2017-18 financial year.
However, the loan fee or loading amount, which may be up to 25% of your course fee and added to your fees, is not claimable. Further, the repayments you make to the Australian Government on your FEE-HELP debt are not an allowable deduction.
Please note: You have advised that you have used the online calculator and the result was that you would receive less than your actual expenses. Our website provides information regarding the expenses you can and cannot claim and explains the $250 reduction. This information can be found at https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/self-education-expenses/