Private ruling: Self-education expenses
Published: June 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to a deduction for your prepaid self-education expenses? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: 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. 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). In your case, it is accepted that the degree will maintain or enhance the skills that are required in the performance of your current employment duties. Consequently the self-education expenses incurred have the necessary and relevant connection with the earning of your assessable income and are therefore deductible. An immediate deduction is allowable as the period to which the expense relates does not exceed 12 months and ends in the income year after the expense is incurred.

Relevant facts: You are employed as a senior executive. | You will be undertaking 12 months study to complete a Masters of Business Administration. | You will prepay the course fees