Edited version of private advice

Authorisation Number: 1052328559835

Date of advice: 11 November 2024

Ruling

Subject: Self-education expenses

Question

Are you entitled to claim a deduction for self-education expenses?

Answer

No.

This ruling applies for the following periods:

Income year ending 30 June 20XX

Income year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are employed as a teacher.

You are employed on a permanent part-time basis.

The start date of your employment is XX XXXX 20XX and is ongoing.

In the 20XX financial year you commenced a Master's course, majoring in guidance and counselling. Your reason for undertaking the course is to further your career and explore a different pathway within education. Also, there is currently high demand for guidance counsellors in education. After the completion of the course you will have the ability to become a school-based counsellor within the school where you are employed.

The course is being undertaken at the University.

The start date of your course was XX XXXX 20XX and the predicted end date will be XXXX 20XX.

You are a part-time student.

Your course is subsidised by the Commonwealth Government.

You receive no allowances, reimbursements, time off, or other incentives or encouragements by your employer to assist you in undertaking the course.

You have provided a copy of the course overview.

You consider this course directly relates to your employment or income earning activities because:

•         wellbeing and student support are of high priority now and gaining valuable knowledge of theories and processes that underpin this is valuable to you as a teacher and the students you encounter every day;

•         the need for this line of work is only going to grow.

You have provided written evidence for all expenses for which you want to claim a deduction. These include a Student Contribution fee and a Student Amenities fee. So far, you have incurred expenses for both of these.

Relevant legislative provisions

Income Tax assessment Act 1997 section 8-1

Reasons for decision

Issue

Self-education expenses

Question

Are you entitled to claim a deduction for self-education expenses?

Summary

You are not entitled to claim a deduction for the Student Contribution expense because no deduction is allowed for this. You are not entitled to claim a deduction for the Student Amenities Fee because the expense has insufficient connection to your income earning activities as a music teacher.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 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.

Expenditure must have a close connection to the performance of duties and activities through which the taxpayer earns their income.

Taxation Ruling 2024/3 Income tax: deductibility of self-education expenses incurred by an individual (TR 2024/3) discusses the circumstances under which self-education expenses are allowable as a deduction.

Student Contribution

Paragraph 99 of TR 2024/3 discusses the deductibility of course fees for a Commonwealth supported place:

99. 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).

Your Master's course is subsidised by the Commonwealth Government. You are required to pay the Student Contribution amount, for which you wish to claim a deduction. However, as per TR 2024/3, you cannot claim a deduction for the Student Contribution amount you pay. Therefore, the expenses you incur for to your Student Contribution are not considered allowable as a deduction under section 8-1 of the ITAA 1997 for the income years in which they were incurred.

Student Amenities fee

A deduction is allowable for self-education expenses 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 (TR 2024/3, paragraph 22).

Similarly, 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 their current income earning activities in the future, a deduction is allowable (TR 2024/3, paragraph 22).

However, no deduction is allowable for self-education expenses if the study is to enable a taxpayer to get employment or to obtain new employment. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income (TR 2024/3, paragraph 23).

Your Master's course will not maintain or enhance the skills that are required in the performance of your current employment as a teacher. Nor will it lead to an increase in your income as a teacher. Further, the course will enable you obtain new employment as a school-based counsellor.

The expenses you incur for your Student Amenities fees are not considered to have the relevant connection to your current income earning activities as a teacher and are incurred at a point to soon. Therefore, the expenses you incur for these fees are not considered allowable as a deduction under section 8-1 of the ITAA 1997 for the income years in which they were incurred.