Edited version of private advice

Authorisation Number: 1052363684795

Date of advice: 20 February 2025

Ruling

Subject: Deductions

Question 1

Are you entitled to claim course fees incurred while undertaking study for a bachelor's degree at TAFE?

Answer

Yes.

Question 2

Are you entitled to a deduction for costs incurred for travel between your place of work and the campus while undertaking the study course as self-education expenses under section 8-1 of the Income Tax Assessment Act (ITAA 1997)?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You were employed on a full-time basis by a XXXX from DD MM 20YY as a XXXX.

Your position required XXXX XXXX.

You ceased employment on DD MM 20YY. Between MM 20YY and MM 20YY, you were a sub-contracted and invoiced the employer for work you completed. You commenced a permanent part-time position with this employer from DD MM 20YY until DD MM 20YY.

On DD MM 20YY you commenced a permanent full-time position with your previous employer.

You commenced a degree as a full-time student in semester XX 20XX with TAFE XX and completed your study at the end of semester XX 20XX.

You enrolled and completed 21 subjects of the course.

You received recognition of prior learning (RPL) for two subjects:

Your employer has provided a letter of support for the study.

You have not been reimbursed for any self-education expenses by either of your employers.

Your employers provided unpaid time off work to attend any classes or examinations.

You travelled by train from your place of work or home to attend on campus.

You wish to claim as a deduction the course fees and train travel from your place of work to the campus.

You paid for the course fees in instalments in 20YY.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Question 1

Are you entitled to claim course fees incurred while undertaking the course of study at TAFE?

Reasons for decision

Self-education expenses incurred in attending educational institutions are deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) where the expenses have the necessary connection in gaining or producing the taxpayer's assessable income.

Self-education expenses are incurred in gaining or producing your assessable income where your income-earning activities are based on the exercise of a skill or some specific knowledge and the self-education enables you to maintain or improve that skill or knowledge.

Subject to the general tests under section 8-1 being met, the course or tuition fees of attending an educational institution related to self-education are allowable.

Course fees to attend a university or approved higher education provider are deductible only where you are enrolled in a full fee-paying place.

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.

A full fee-paying student using a FEE-HELP loan, or a personal loan, can claim a deduction for their course fees (where they are deductible) at the time they pay those fees using the borrowed money. You cannot claim a deduction for repaying the loan, either as part of your income tax assessment or as voluntary repayments.

Interest incurred on borrowed monies where the funds are used to pay for deductible self-education expenses, such as course fees, is deductible. It is necessary to have regard to the connection between the interest expense and the income-earning activity in each year in which the interest is claimed.

Indexation of a loan, such as a HELP loan, is not interest. You cannot claim a deduction for indexation applied to your loan.

Application to your circumstances

In your situation we are satisfied that you have a genuine desire and need to maintain or improve your skills and knowledge. The course undertaken and completed is designed to improve your skills.

The Commissioner accepts there is an identifiable nexus or connection between the course and your duties in the position and undertaking your bachelor's studies as demonstrated through the position description and description provided of the relationship between your employment duties and your study. The course of study is useful to your employment and is sufficiently connected with your employment.

You can claim a deduction for the course fees when the expenditure is incurred, that is, in the financial year you became liable for the expenses, and the study expense is directly related to your income-earning activities.

A partial deduction may be appropriate where only part of the self-education is relevant to your current income-earning activities. Where particular subjects, classes or modules within the course are sufficiently connected to your income-earning activities, you apportion by claiming a deduction only for the expenses relating to those particular subjects, classes or modules that are deductible. The list of subjects provided are sufficiently connected to your income-earning activities.

If you cease your income-earning activities part-way through completing your deductible self-education, only the expenses incurred while you were undertaking your income-earning activities are deductible.

Consequently, your self-education expenses for the course are sufficiently connected to your employment. The costs are therefore deductible under section 8-1 of the ITAA 1997 for the period of your enrolment in the course of study at TAFE.

Question 2

Are you entitled to a deduction for costs incurred for travel between your place of work and the campus while undertaking the study course as self-education expenses under section 8-1 of the ITAA 1997?

Detailed reasoning

Travel expenses such as costs for travelling to and from a place of education are deductible. Only those expenses directly attributable to the self-education incurred in gaining or producing your assessable income are allowable.

The Commissioner takes the view that, where the requirements for deductibility are otherwise met, the transport costs (e.g., fares) incurred in travelling between: (a) home and an educational institution (including a library for research) and back again; and (b) the place of work and the educational institution and back again, qualify as self-education expenses.

Application to your circumstances

In your case, it is accepted that the train fares to travel from your place or work or home to the TAFE campus and back to work or home again are deductible.