Private ruling: Self-Education Expenses
Date of advice: 19 January 2016
Published: March 2016
Ruling period: Year ending 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you entitled to a deduction for self-education expenses, including tuition fees, while studying the course? | A1: Yes. | Q2: Are you entitled to a deduction for the tuition fees associated with studying the course if those fees are paid using FEE-HELP? | A2: Yes.

Relevant facts and circumstances: You are currently employed as a manager. You are planning to complete a post graduate related course. Your supervisor has encouraged studying this course and has said that your employer will assist you by allowing you flexible work times and time off for study and exams. In your current role this course will allow you to implement new management techniques, practices and approaches. You are currently considering using a FEE-HELP loan to pay for your tuition fees.

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

Reasons for decision: Summary: You are currently employed as a manager. It is your intention to undertake a management related course while still employed in your current role. It is accepted that the course will enhance the skills you require in this position. This satisfies the test of the expense being connected to your assessable income as long as you remain employed in your current position. In your case, your course will be directly related to your assessable income. In addition to your tuition fees it is expected that you will incur other relevant self-education expenses. Given that your course will be related to your current employment any relevant self-education expenses incurred, including your tuition fees, will be an allowable deduction under section 8-1 of the ITAA 1997. | Detailed Reasoning - FEE-HELP: FEE-HELP was introduced by the Commonwealth to provide assistance to students who are not supported by the Commonwealth to pay course fees. If the student meets the requirements for eligibility for a deduction for self-education expenses the whole course fee is deductible. The student is not prevented from claiming a deduction because assistance to pay all or part of the course fee was received under FEE-HELP. The course of study is directly related to your current income earning activities and is likely to lead to an increase in your knowledge and abilities that will assist you in those income earning activities. Even if you obtain a loan for all or part of the fees for the course under FEE-HELP this does not preclude you from claiming a deduction for the expenses incurred in relation undertaking the course. Accordingly, you are entitled to a deduction under section 8-1 of the ITAA 1997 for expenses paid for the course of study as it is directly related to your current income earning activities, even though you may obtain a loan for all or part of those fees under FEE-HELP. However, payments made to reduce your FEE-HELP debt are not deductible. If you claimed these payments as well, you would essentially be claiming your course fees twice, the first time when you incurred the course fees and the second when you repay the FEE-HELP loan you took out to pay the course fees. Consequently FEE-HELP loan repayments are not deductible. | Detailed Reasoning - Further issues for you to consider: For more information about what types of self-education expenses are deductible please refer to TR 98/9 at http://law.ato.gov.au/atolaw/view.htm? docid=TXR/TR989/nat/ato/00001. Please note that the self-education expenses you can deduct may be subject to a reduction of up to $250 in accordance with section 82A of the Income Tax Assessment Act 1936. An explanation on how this provision operates is provided at paragraphs 119 to 155 of TR 98/9, which can be accessed on the ATO website at www.ato.gov.au.

Reasons for decision: 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 the course of gaining or producing the assessable income, but are not allowable to the extent that they are of a capital, private or domestic nature. | Taxation Ruling TR 98/9 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).