Edited version of private advice

Authorisation Number: 1052173044561

Date of advice: 28 September 2023

Ruling

Subject: Self-education expenses

Question

Are you entitled to claim a deduction for your self-education expenses when receiving a scholarship?

Answer

Yes.

Yes, you are entitled to claim a deduction for self-education expenses for which you received a taxable scholarship payment from your employer, the taxable scholarship payment is to assist with education fees towards a course which has a sufficient connection to you earning your assessable income.

This ruling applies for the following period:

30 June 2023

The scheme commenced on:

1 July 2022

Relevant facts and circumstances

Your occupation is a nurse in Intra-operative Theatre Nursing.

You provided a contract showing that you accepted a taxable postgraduate scholarship of $* from your employer.

A condition of accepting the scholarship is for you to be enrolled and complete the Graduate Certificate of Intra-operative Nursing course with a University.

A condition of accepting the scholarship is that you intend to continue working within the area of Intra-operative Theatre Nursing in a State Public Health Service for a minimum number of months following the completion of the course.

A letter you provided shows that you are enrolled in the above course with Semester 1.

You are satisfied that there is sufficient nexus between your occupation and the course.

You are not eligible for a HECS loan.

You pay for the study fees as they are invoiced.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 section 51 -10

Income Tax Assessment Act 1997 section 51 - 35

Income Tax Assessment Act 1997 section 26 - 20(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. No deduction is allowed where a specific provision of the taxation legislation prohibits it.

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 your 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.

TR 98/9 also discusses the types of self-education expenditure that are allowable. These include:

•         some course or tuition fees (see below for further discussion)

•         books, journals and stationery

•         accommodation and meals where you are required to be away from home overnight in connection with a self-education activity, and

•         depreciation on a computer or laptop and internet access although only the study related usage proportion may be claimed.

Course or tuition fees incurred in attending an education institution, including student union fees, are allowable expenses under section 8-1 of the ITAA 1997. However, subsection 26-20(1) of the ITAA 1997 prevents a deduction for certain assistance provided to students. You cannot claim a deduction for:

•         a student contribution amount within the meaning of the Higher Education Support Act 2003 paid to a higher education provider, or

•         a payment to reduce a debt to the Commonwealth under Chapter 4 of that Act.

You have received income, in the form of a scholarship, in relation to your studies. This income will be examined to determine if you are entitled to claim any of your self-education expenses in relation to that income.

Deduction in relation to scholarship

Section 51-10 of the ITAA 1997 provides that if you are a full-time student at a university and receive a scholarship, bursary, educational allowance or educational assistance, then the amounts received are exempt from tax.

However, such payments are not exempt from tax if they are made on the condition that the student will be an employee of, or work for, the payer (section 51-35 of the ITAA 1997).

Your scholarship payments form part of your assessable income. Therefore, you can claim a deduction for self-education expenses incurred in relation to the taxable scholarship amount relating to education fees towards a course which has a sufficient connection to you earning your assessable income.