Edited version of private advice

Authorisation Number: 1051882099371

Date of advice: 5 August 2021

Ruling

Subject: Self-education expenses

Question

Are the course fees paid in connection with the self-education course an allowable deduction?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You currently employed.

You have enrolled in a self-education course.

There 12 subjects in total through this course including 2 relevant specialisation subjects.

The course commenced in early 20XX and will conclude in late 20XX, where you will be completing the course part-time.

In addition to the cost for the course, you will also incur student services fees each Semester.

You do not intend of claiming any travel expenses as the study is on-line.

You are paying for the entire course fees using FEE-HELP.

You are required to do this course to be able to continue your current employment into the future to ensure that you have the required skills to continue in your current employment.

In addition, due to your employer entering into an agreement which will see their current set-up becoming significantly more complex, you are also required to do the course to be able to transition into a new role in late 20XX within the same field which will oversee multiple sites.

You currently hold an undergraduate qualification in a different subject area, and upgrading your degree to the Master course will equip you with the skills you require to retain your current role into the future and undertake the cross-site role to increase your earning potential.

This qualification is the best suited for you to fulfil the requirements above as it contains the relevant specialisations to both employment roles listed above.

The new role which will commence in late-20XX will attract a higher rate of pay.

The duties for your current role and the course structure align. The course maintains and improves skills and specific knowledge that you exercise in your current income earning capacity.

The duties for your future role which is to commence in late-20XX and the course structure also align. The course will also maintain and improve skills and specific knowledge that you will exercise in your future current income earning capacity within the same field.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

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 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).

However, paragraph 15 of TR 98/9 states that no deduction is allowable for self-education expenses if the study is to enable the taxpayer to get employment, obtain new employment or to open up a new income-earning activity (whether in business or the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field or employment in which the taxpayer is not yet engaged. All of those expenses would be incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.

Further, paragraph 26 of TR 98/9 states that expenses relating to self-education which are compulsory and unavoidable, as well as those for which a need can be shown in terms of fulfilling the requirements of the course, are regarded as being 'necessarily incurred' and are expenses of self-education.

In this case, the duties for your current role and the course structure align significantly. The course maintains and improves skills and specific knowledge that you exercise in your current income earning capacity.

It is considered that the study will maintain or improve your skill or knowledge used in your current income earning activity. Consequently, you are entitled to a deduction for the course fees incurred.

In addition, the duties for your future role which is to commence in late 20XX and the course structure also align significantly.

As such, it is also considered that the study will maintain or improve your skill or knowledge required in your future income earning activity within the exact same field / expertise.

Given the fact that your study is also aligned to the duties of your new employment which will be commencing in December 20XX, along with the fact that the new employment is also within the same field, the whole amount of the course fees will be allowed as a deduction.