Edited version of private advice

Authorisation Number: 1052319825895

Date of advice: 21 October 2024

Ruling

Subject: Self-education expenses

Question

Are you entitled to a deduction for the course fees associated with your studies?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20YY

Year ended 30 June 20YY

The scheme commenced on:

1 July 20YY

Relevant facts and circumstances

You are a registered professional.

You have been a registered professional for a number of years.

You studied as a full-time student in the relevant Calendar year, for a different professional discipline related to your current profession.

The course was for a period of several months.

You worked part-time as a professional to be able to complete the course.

You were not requested to complete the course by your employer and your employer did not contribute to the costs associated with the course.

You had a Commonwealth Supported Fee HELP loan.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Work-related expenses generally fall for consideration under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). This section allows a deduction for losses and outgoings which are incurred while gaining or producing assessable income, unless the losses or outgoings are of a capital, private or domestic nature.

The Commissioner's view on the deductibility of self-education expenses is contained in Taxation Ruling TR 2024/3 Income tax: deductibility of self-education expenses. In accordance with TR 2024/3, expenses of self-education will satisfy the requirements of section 8-1 of ITAA 1997 if:

•                     a taxpayer's income-earning activities are based on the exercise of a skill or some specific knowledge, and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge (FC of T v. Finn (1961) 106 CLR 60;(1961 12 ATD 348) (Finn's Case); or

•                     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 their current income earning activities in the future (FC of T v. Hatchett (1971) 125 CLR 494; 71ATC 4184; (1971) 2ATR 557 (Hatchett's Case).

Therefore, 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, self-education expenses will not be deductible if the study is intended to:

•                     enable you to get employment.

•                     enable you to obtain new employment, or

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

Course Fees

Course fees to attend a university or approved higher education provider are deductible only where you are enrolled in a full fee-paying place (where the government does not pay any part of your fees).

You cannot claim a deduction for course fees in respect of a Commonwealth supported place (CSP). A CSP is a type of enrolment where the total cost of your study is split into 2 parts:

•                     Subsidised amount - the Australian Government pays a subsidy directly to your education provider. This is not a loan and you do not pay it back. You cannot claim a deduction for the subsidised amount.

•                     Student contribution amount - you pay the amount remaining, being the student contribution amount which you must pay by the census date either upfront or using a HECS-HELP loan, if you are eligible. HECS-HELP loans are repaid through the tax system once your income is above a certain threshold. You cannot claim a deduction for the student contribution amount you pay (either upfront or by way of a HECS-HELP loan)

If you use borrowed money to pay for course fees, this will not affect the deductibility of those fees or when you can claim a deduction. However, you cannot claim a deduction for repaying the principal amount borrowed.

Application to your circumstances:

The Commissioner is not satisfied that the course has the relevant connection with your employment as a registered professional.

The course may be useful to you as a registered professional, but it is clearly a course taken of those who wish to become employed in specific capacity.

Therefore, the course does not have the nexus with your employment as a registered professional.

In addition to this your course fees would not be an allowable deduction even if the course had the relevant connection to your employment as a professional as your course fees are paid under a Commonwealth Supported Place which means they cannot be an allowable deduction.

Your course fees are not an allowable self-education deduction under Section 8-1 of the ITAA 1997.