Edited version of private advice

Authorisation Number: 1051975335702

Date of advice: 22 April 2022

Ruling

Subject: Self-education expenses

Question

Are the expenses you incurred in studying the Master of Business Administration deductible?

Answer

No. You are not entitled to a deduction for the expenses you incurred in studying the Master of Business Administration.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You enrolled in a Master of Business Administration (MBA).

You enrolled in the MBA as a means to facilitate a career transition and pursue a career as an investment professional in Australia.

The MBA program ran for 21 months. Before beginning the program, you were employed by Company A overseas commencing during the 20XX income year.

You took educational leave to complete the MBA program.

Under the Educational Leave Agreement, Company A would have financed your education provided you continued employment at the firm for two years following the completion of your MBA.

You completed a paid internship at Company B in Australia for 4 months during the 20XX and 20XX income years.

You began employment with Company B in Australia after completing the MBA.

You reimbursed all fees and costs to Company A after signing with Company B in Australia.

Reimbursement to Company A was finalised in 20XX.

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 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 Income tax: deductibility of self-education expenses incurred by an employee or a person in business discusses the circumstances under which self-education expenses are allowable as a deduction. No deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to get employment or to obtain new employment. This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. Such expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income (High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541).

Application to your circumstances

In your case, you enrolled in the Master of Business Administration (MBA) program as a means to facilitate a career transition and pursue a career as an investment professional in Australia. The predominant focus of the MBA program was designed to open a new income earning activity.

You gained new employment while participating in the MBA program. For example, you received a paid internship during breaking between 1st and 2nd year of study; and when you completed the MBA program you gained full time employment. As such, the expenses incurred associated with the program were incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.

Therefore, you are not entitled to a deduction under section 8-1 of the ITAA 1997 for the expenses you incurred in studying the Master of Business Administration.