Private ruling: Education tax refund
Published: November 2011
Ruling period: Year ended 30 June 2011 | Year ending 30 June 2012
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to include a portion of your costs for a bundled telephone and internet connection in an education tax refund (ETR) claim? | A1: Yes.

Relevant facts and circumstances: You have a child in primary school. You have a home internet connection which is bundled with your home phone. The monthly charge is one fixed amount for both of these services. You have contacted the provider and were told that they cannot advise what portion of the fixed fee is attributed to the internet connection. So you are unable to determine what amount you actually incurred in relation to your internet expenses.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 61-M | Income Tax Assessment Act 1997 Section 61-640

Reasons for decision: Summary: Under Subdivision 61-M of the Income Tax Assessment Act 1997 (ITAA 1997), an education expenses tax offset also referred to as the ETR provides a partial refund of the education expenses you incur for a primary or secondary school student in your care. For the purposes of the ETR eligible education expenses are items that support a child's or independent student's primary or secondary school education. Section 61-640 of the ITAA 1997 mentions the kind of expenses that are eligible education expenses. It includes the running costs of a home internet connection. In your case your home phone and internet are bundled under one fixed fee, and there is no break up of the cost of each item. Where an expense is incurred for more than one purpose, the item of expenditure is generally apportioned into its deductible and non-deductible components. The Commissioner believes that the method of apportionment must be fair and reasonable. The Commissioner would consider it reasonable to allocate the bundle fee equally between the phone and internet. Therefore this method of apportionment may be used in order to determine the amount to claim under the ETR for your internet connection. To be eligible to claim the ETR, the parent or carer would need to have received FTB part A for the child. Therefore, while the internet cost is considered an eligible education expense, a parent or carer would not be able to claim this expense unless they were entitled to claim the ETR. For more information on the ETR, please refer to the Tax Office website at www.ato.gov.au.

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