Edited version of private advice

Authorisation Number: 1051771811389

Date of advice: 4 November 2020

Ruling

Subject: Self-education expenses

Question 1

Will the course fees for Advanced Diploma of Maritime Operations (Marine Engineering Class 1) be deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes. Your self-education expenses are deductible, as it is accepted the study meets the requirements detailed in Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business. The amount of your deduction for self-education expenses may have to be reduced by $250. Further information about self-education expenses can be found by searching 'QC 31970' on ato.gov.au

Question 2

Will the course fees for Advanced Diploma of Maritime Operations (Marine Engineering Class 2) be deductible under section 8-1 of the ITAA 1997?

Answer

Yes. Your self-education expenses are deductible, as it is accepted the study meets the requirements detailed in Taxation Ruling TR 98/9. The amount of your deduction for self-education expenses may have to be reduced by $250. Further information about self-education expenses can be found by searching 'QC 31970' on ato.gov.au

Question 3

Will the course fees as part of Bachelor of Applied Science (Marine Engineering) specialising in Class 2 and Class 1 Chief Engineer, you will undertake be deductible under section 8-1 of the ITAA 1997?

Answer

Yes. Your self-education expenses are deductible, as it is accepted the study meets the requirements detailed in Taxation Ruling TR 98/9. The amount of your deduction for self-education expenses may have to be reduced by $250. Further information about self-education expenses can be found by searching 'QC 31970' on ato.gov.au

Question 4

Will the motor vehicle expenses incurred for your studies be deductible under section 8-1 of the ITAA 1997?

Answer

Yes. The day-to-day costs incurred for accommodation and meals are generally a private, non-claimable expense unless you are:

•         participating in self-education activities, and

•         required to be temporarily away from home for one or more nights.

Any expenses incurred for a dual purpose will need to be apportioned. Further information about self-education expenses can be found by searching 'QC 16918' on ato.gov.au

Question 5

Will the accommodation expenses incurred for your studies be deductible under section 8-1 of the ITAA 1997?

Answer

Yes. The day-to-day costs incurred for accommodation are generally a private, non-claimable expense unless you are:

•         participating in self-education activities, and

•         required to be temporarily away from home for one or more nights.

Any expenses incurred for a dual purpose will need to be apportioned. Further information about self-education expenses can be found by searching 'QC 16918' on ato.gov.au

Question 6

Will the meal expenses incurred for your studies be deductible under section 8-1 of the ITAA 1997?

Answer

Yes, in part. You will need to apportion your meal expenses between private meals and only claim for meals incurred in relation to study.

The day-to-day costs incurred for meals are generally a private, non-claimable expense unless you are:

•         participating in self-education activities, and

•         required to be temporarily away from home for one or more nights.

Any expenses incurred for a dual purpose will need to be apportioned. Further information about self-education expenses can be found by searching 'QC 16918' on ato.gov.au

This ruling applies for the following period:

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are employed as a Third Engineer and Engineer Watchkeeper (Motor & Steam).

You complete your certificate of competency yearly as required by Australian Maritime Safety Authority (AMSA).

You currently hold the following qualifications:

•         Engineer Watchkeeper (Motor & Steam)

•         Diploma of Transport and Distribution (Marine Engineering - Engineer Watchkeeper)

•         Diploma of Engineering

You do not have a current employment contract however you do sign a Seafarers Agreement with your employer every six months.

You and your employer signed your most recent Seafarers Agreement on the XXXX.

Your employment duties as per the AMSA website

•         Engineer watchkeeper officer on ships of any propulsion power in any operating area.

•         If endorsed, you can perform Second engineer duties on ships less than 3000 kilowatts in any operating area.

•         If endorsed, you can perform Chief engineer duties on ships less than 3000 kilowatts in near coastal waters.

You are required to operate your employment duties in accordance with Marine Order 70 (Seafarer certification) 2014 and Marine Order 72 (Engineer officers) 2014, made under the Navigation Act 2012.

You intend to study the following courses to advance your current employment opportunities with your employer:

•         Advanced Diploma of Maritime Operations (marine engineering class 1)

•         Advanced Diploma of Maritime Operations (marine engineering class 2)

•         Bachelor of Applied Science (Marine Engineering)

The core subjects that you will complete for Advanced Diploma of Maritime Operations (marine engineering class 1) are:

•         MARL018 - Apply advanced principles of marine electrotechnology.

•         MARL019 - Apply advanced principles of marine engineering thermodynamics.

•         MARL020 - Apply advanced principles of marine mechanics.

•         MARL021 - Apply advanced principles of naval architecture.

•         MARF022 - Apply maritime resource management principles.

•         MARL030 - Demonstrate advanced knowledge of marine auxiliary boilers.

•         MARL031 - Demonstrate advanced knowledge of marine auxiliary machinery and systems.

•         MARL032 - Demonstrate advanced knowledge of marine control systems and automation.

•         MARL034 - Demonstrate advanced knowledge of marine electrical systems.

•         MARL036 - Demonstrate advanced knowledge of ship operation and maintenance.

•         MARG004 - Provide leadership to crew.

•         MARF010 - Work safely in confined spaces on a vessel.

The core subjects that you will complete for Advanced Diploma of Maritime Operations (marine engineering class 2) are:

•         MARL014 - Apply intermediate principles of marine electrotechnology.

•         MARL015 - Apply intermediate principles of marine engineering thermodynamics.

•         MARL016 - Apply intermediate principles of marine mechanics.

•         MARL017 - Apply intermediate principles of naval architecture.

•         MARF022 - Apply maritime resource management principles.

•         MARL022 - Demonstrate basic knowledge of ship construction.

•         MARL023 - Demonstrate basic knowledge of ship operation and maintenance.

•         MARL024 - Demonstrate intermediate knowledge of marine auxiliary boilers.

•         MARL025 - Demonstrate intermediate knowledge of marine auxiliary machinery and systems.

•         MARL026 - Demonstrate intermediate knowledge of marine control systems and automation.

•         MARL028 - Demonstrate intermediate knowledge of marine electrical systems.

•         MARG004 - Provide leadership to crew.

•         MARF010 - Work safely in confined spaces on a vessel.

The subjects that you will complete for Bachelor of Applied Science (Marine Engineering) are as follows:

•         JNE313 - Advanced Marine Engineering (General)

•         JNE314 - Advanced Marine Electrical Engineering

•         JNE315 - Advanced Marine Control and Automation

•         JNE316 - Advanced Marine Engineering (Motor)

•         JNE310 - Advanced Applied Mechanics

•         JNE311 - Advanced Electro-technology

•         JNE312 - Advanced Marine Thermodynamics

•         JNE319 - Advanced Naval Architecture and Ship Construction

•         JND323 - Managerial and Leadership Skills

You will remain employed with your employer accessing annual leave and unpaid leave to complete your studies.

The course fees are as follows:

•         Advanced Diploma of Maritime Operations (marine engineering class 1) $XXXX

•         Advanced Diploma of Maritime Operations (marine engineering class 2) $XXXX

•         Bachelor of Applied Science (Marine Engineering) $XXXX

While studying you intend travel daily from your home to the campus in your motor vehicle incurring expenses.

This travel is approximately XX kilometres per day to campus and home from campus.

You will investigate private rental accommodation if the daily travel from your home to campus becomes too difficult to maintain. Thus, incurring additional living expenses such as accommodation and meals.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 section 26-20

Income Tax Assessment Act 1936 section82A

Reasons for decision

Section 8-1 of the 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.

The Commissioner's view on the deductibility of self-education expenses is contained in Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business. The ruling explains that, provided there is sufficient connection between a course of self-education and current income earning activities, you are entitled to claim a deduction for your self-education expenses.

However, as stated in paragraph 15 of TR 98/9, such expenses will not be deductible if the study is intended to:

•         Enable you to get employment.

•         Enable you to obtain new employment.

•         Open up a new income-earning activity (whether in business or in your current employment).

In your case it is not considered that you will to be opening up a new income-earning activity as you will be completing your studies towards Advanced Diploma of Maritime Operations (Marine Engineering Class 1 and Class 2) and Bachelor of Applied Science (Marine Engineering) to assist you further in your current employment.

Limitation on deductibility of expenses

Section 82A of the Income Tax Assessment Act 1936 (ITAA 1936) operates to limit the amount of self-education expenses otherwise allowable under section 8-1 of the ITAA 1997. Only the excess of the self-education expenses over $250 may be considered for deduction under section 8-1of the ITAA97. Therefore, your claims will need to be reduced by $250 for each income year that you make a claim for self-education expenses.

Some journeys cannot be claimed, but you may be able to offset the cost of these journeys against the $250 reduction. For more information, go to ato.gov.au and search quick code QC 31970 or self-education expenses.

Self-education and HECS HELP Assistance

Taxation Ruling TR98/9 also discusses when 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.

When course fees are paid via the HECS HELP assistance you cannot claim the course fees for your studies 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.