Edited version of private advice

Authorisation Number: 1052030334111

Date of advice: 6 September 2022

Ruling

Subject: Self education expenses

Question 1

Are you entitled to a deduction for the self-education expenses incurred for your Masters of Business Administration (MBA) in the income year ended 30 June 20YY?

Answer

Yes.

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 Income tax: deductibility of self-education expenses incurred by an employee or a person in business discusses circumstances in which self-education expenses are allowable as a deduction under section 8-1 of the ITAA 1997. If a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and the self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction.

In addition, 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, the self-education expenses are allowable as a deduction.

This ruling applies for the following period:

Year ending 30 June 20YY

The scheme commences on:

1 July 20YY

Relevant facts and circumstances

You work as a XXXX

Your duties include but are not limited to:

•                     Leading teams of analysts and consultants to deliver client work and being the main point of escalation/contact with the client

•                     Honing functional skills and expertise in areas of specialisation to provide solutions to client problems

•                     Reporting up to team senior managers and managing directors to develop pipeline of new work

•                     Creating and delivering C-level communications

You are undertaking a Master of Business Administration (MBA) at the XXXX which commenced in DD MM YYYY.

Subjects you will be undertaking include

•                     Financial Accounting

•                     Financial Markets & Valuation

•                     Organisational Behaviour 1

•                     Prices & Markets

•                     Uncertainty, Data & Judgement

•                     Introduction to Strategy

•                     Corporate Financial Policy

•                     Managing Customer Value

•                     Organisational Behaviour 2

•                     Managerial Accounting

•                     Processes & Operations Management

•                     Leadership Communication Foundations

•                     Macroeconomics in the Global Economy

•                     Business and Society (Ethics, Political Environment, Public Policy)

•                     10.5 electives (selection out of 75 available electives)

•                     Capstone Course

You are undertaking the course in order to continue your role as a XXXX with your current employer.

You believe that an MBA is designed to help students gain an improved understanding of general business functions. It is a course that provides theoretical and practical training for business management.

As a XXXX, you work with businesses (and their various functions) to solve their problems. Pursuing an MBA will allow you to have an enhanced understanding of how to better and effectively solve business problems.

You are not receiving Austudy, ABSTUDY, Youth Allowance or receiving a taxable bonded scholarship to study.

You are not using the Higher Education Loan Program (HELP) to pay the course fees.

You are not receiving an allowance or being reimbursed by anyone for expenses incurred in relation to your study.

It is anticipated that the total cost will be approximately $X. You have paid the MBA course fee in two instalments, instalment one was paid on DD MM YYYY and instalment two was paid on the DD MM YYYY you provided copy of the receipts.

Your employer supports your decision to undertake the course and is allowing you to have flexible work hours to complete your studies.

You have provided an email from your employer confirming support in the development of their staff.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1