Private ruling: Self-education expenses
Date of advice: 1 September 2025
Published: 3 November 2025
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Can you claim a deduction for course fees you repaid to the Employer? | A1: No

Relevant facts and circumstances: On Date one, you commenced employment with the Employer as a paralegal. On Date 2, you signed a new contract to commence employment as a solicitor with the Employer from Date 3. You didn't have a formal position description with the Employer due to the boutique firm structure. While employed at the Employer, you undertook work in the areas of probate, estate administration and estate planning. Clause A and Clause B of the contract you signed on Date 2 are extracted below: A On completion of a master's degree qualification in the relevant subject(post graduate degree qualification) and on the production of a letter or certificate of course completion (degree qualification date) the employee's base salary will be increased by a set amount per annum (exclusive of superannuation which will be paid in addition). B Post graduate degree qualification B1 Subject to satisfactory completion of the requisite units, the Employer shall pay the employee's course fees for undertaking a master's degree qualification in succession law (or equivalent as approved by the employer). B2 If the employment is terminated for any reason before the expiration of one (1) year after the degree qualification date, the employee shall repay the course fee to the employer in full. B3 If the employment is terminated for any reason more than one (1) year after the degree qualification date but less than two (2) years after the degree qualification date, the employee shall repay three quarters (3/4) of the course fees to the employer. In late 20YY, you were promoted to Associate in accordance with the contract dated and signed on Date 2. The Employer amended your employment contract to include a provision for them to pay your course fees upon the satisfactory completion of the units. In 20YY, you commenced studying a Master course, majoring in several areas relevant to your employment. Your academic transcript from the education provider states the academic requirements were met on DD MM 20YY with the conferral date DD MM 20YY. On Date 4, you submitted your resignation. Your final day of employment with the Employer was Date 5. After you left the Employer, you were required to repay the course fees in accordance with Clause B3 of the contract dated Date 2.

Relevant legislative provisions: Income Tax Assessment Act section 8-1

Reasons for decision: Detailed Reasoning - Detailed reasoning: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses or outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent that they are outgoings of a capital, private or domestic nature. The courts have considered the meaning of 'incurred in gaining or producing assessable income'. In Ronpibon Tin NL & Tongkah Compound NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; [1949] HCA 15; (1949) 4 AITR 236; (1949) 8 ATD 431 the High Court stated that: 'For expenditure to form an allowable deduction as an outgoing incurred in gaining or producing assessable income it must be incidental and relevant to that end. The words "incurred in gaining or producing assessable income" mean in the course of gaining or producing such income.' The expenditure must therefore be related to the production of assessable income. | Detailed Reasoning - Application to your circumstances: The repayment of your course fees to the Employer by you is not related to the earning of assessable income. The payment represents expenditure incurred by you in relation to a condition of the employment contract. Therefore, the expenditure incurred cannot be said to have been incurred as a self-education expense. Accordingly, the repayment of your course fees to your employer is not an allowable deduction under section 8-1 of the ITAA 1997 as it was not incurred in gaining or producing assessable income.