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Edited version of your written advice
Authorisation Number: 1051401623131
Date of advice: 23 July 2018
Ruling
Subject: Self education expenses
Question 1
Is an Advance fee paid for a Master’s degree a deductable expense for Self-Education Expenses?
Answer
Yes.
Section 8-1 of the Income Tax Assessment Act 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 discusses the circumstances under which 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.
It is considered that the Masters degree is sufficiently related to and improved upon the skills you use in your current income producing activities.
Additional Information
The requested deduction is limited to the initial payment for the course fees upfront, while employed and does not include any provision for accommodation, meals or other expenses associated with living away. The timeframe involved during your studies suggest the establishment of a new place of residence during this time.
This ruling applies for the following periods:
Year ended 30 June 2018
The scheme commences on:
1 July 2017
Relevant facts and circumstances
You are an Australian resident for taxation purposes for the 2018 financial year.
You are intending to do a Master’s degree.
You have applied for leave without pay from your current employer while you complete your studies as per the provisions available to you in your current employment arrangements.
At the completion of your studies you will be recommencing your current employment.
The course tuition fee is payable upfront during the 2018 financial Year.
Your employer has stated the subjects involved in your studies directly relevant to your current work and will enhance your knowledge in your current position as well as other similar positions with the same employer.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.