Edited version of your written advice

Authorisation Number: 1051310719260

Date of advice: 21 November 2017

Ruling

Subject: Self Education deductions

Question 1

Can you claim the course fees incurred for your Masters degree paid via HECS HELP deferred payment as a self-education deduction?

Answer

No.

Question 2

Can you claim the other associated expenses such as resources and allowable travel expenses incurred for your Masters degree as a self-education deduction?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 2015

Year ended 30 June 2016

Year ended 30 June 2017

The scheme commences on:

1 July 2014

Relevant facts and circumstances

You are an Australian resident for taxation purposes.

You are a teacher specialising previously in two subjects, and now in a third subject also.

You were employed at one school prior to January 2016.

You were employed at another school from January 2016 onwards.

You have integrated the learning of the third subject for some students in your original two subject based classes in the 2015 year, as well as teaching in the third subject exclusively in the 2016 and 2017 year.

You enrolled in a Masters degree at a University in 2015 and completed that course in 2016.

You paid for your course fees via the HECS HELP scheme and are repaying those costs.

You incurred expenses relating to textbooks and resources and travel costs getting to and from the university classes.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 section 26-20

Reasons for decision

Issue 1

Question 1

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 or a provision prevents you from deducting it.

Taxation Ruling TR 98/9 discusses when course or tuition fees are allowable as a deduction. You cannot deduct a student contribution amount paid to a higher education provider under the Higher Education Support Act 2003 : paragraph 26-20(1)(ca) of the ITAA 1997. Such payments are made by a student to cover the cost of a course of study at a tertiary educational institution. Repayment amounts for a Higher Education Loan Program (HELP) debt or a Student Financial Supplement Scheme (SFSS) debt are also not deductible: paragraph 26-20(1)(cb) and paragraph 26-20(1)(d) of the ITAA 1997, respectively.

As you paid your course fees via the HECS HELP method you cannot claim the course fees for your Masters degree as a self-education deduction under section 8-1 of the ITAA 1997 as it is specifically denied under section 26-20 of the ITAA 1997.

Question 2

Taxation Ruling TR 98/9 also discusses the circumstances under which other self-education expenses are allowable as a deduction. A deduction is allowable for self-education expenses if a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of the self-education enables the taxpayer to maintain or improve that skill or knowledge (Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348.

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 circumstances you were teaching students the third subject in both your original classes and when teaching in the third subject exclusively. There is a nexus between your income producing activities and the subjects you studied in your Masters degree and as such the costs incurred, other than course fees, can be claimed as a self-education deduction in the years they were incurred under section 8-1 of the ITAA 1997.

You can claim your travel expenses from your home to your place of education and back or from your workplace to your place of education and back. However only the first leg of the trip is deductible, if you went from home to your place of education and then to work, or the other way around.