Private ruling: Self-education expenses
Date of advice: 7 July 2017
Published: December 2017
Ruling period: Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020
Date scheme commenced: 1 July 2017

Ruling: Q1: Are university fees paid upfront for your university course deductible as self-education expenses? | A1: Yes.

Relevant facts and circumstances: You work in a business related firm. Your employer has advised that your salary will increase when you complete your university degree. You will be majoring in a related Degree. You will be paying for the course fees for the university degree upfront.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1. Summary | You can claim a deduction for the course fees for your university degree. | Detailed reasoning | 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 the circumstances under which self-education expenses are allowable as a deduction. A deduction is allowable for self-education expenses if a taxpayer's 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 ( Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348. | 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 his or her current income earning activities in the future, a deduction is allowable. | However, the decision of the High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541 establishes the principle that no deduction is allowable for self-education expenses if the study is to enable the taxpayer to get employment, obtain new employment or to open up a new income-earning activity (whether in business or the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. | If a course of study is too general in terms of the taxpayer's current income-earning activities, the necessary connection between the self-education expenses and the income-earning activity does not exist. | In your case you are currently working in a business related firm and your employer has advised that your salary will increase when you complete your university degree. There is a sufficient connection between the skills and knowledge required in your current employment duties and the degree. Accordingly, you are entitled to a deduction for the costs associated with the degree including the course fees you pay upfront.