Private ruling: Self education expenses
Published: April 2013
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Question and answer: | Are you entitled to claim a deduction for self education expenses? | No

Relevant facts and circumstances: You are being paid by a foreign educational institution to study in Australia. The condition for receiving payment is that you have to return to the foreign educational institution to work.

Relevant legislative provisions: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) | Schedule X Article Y of the Income Tax Agreements Act 1953

Reasons for decision: Summary: 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, relate to the earning of exempt income or are precluded from deduction by another provision of this Act. For a deduction to be allowable there must be assessable income that relates to the deduction. In determining the assessability of income for the purposes of the ITAA 1997 any provisions of relevant International Tax Agreements must be abided by. Under the double tax agreement - "Where a student or a trainee, who is a resident of one of the Contracting States or who was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in the other State solely for the purpose of their education or training, receives payments from sources outside the other State for the purpose of their maintenance, education or training, those payments shall be exempt from tax in the other State." As your income is exempt under the relevant double tax agreement no deduction for self education expenses is allowable.