Private ruling: the deductibility of self education expenses
Date of advice: 27 April 2016
Published: June 2016
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to a deduction for your self-education related expenses incurred after commencing your employment? | A1: Yes. | Q2: Are you entitled to claim a deduction for tuition fees payable to a non-Australian university where these have been incurred after you arrived in Australia? | A2: Yes.


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

Reasons for decision: Detailed Reasoning - Work-related self-education expenses: 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 to the extent to which they are of a capital, private or domestic nature, or relate to the earning of exempt income. Taxation Ruling TR 98/9 discusses the deductibility of self-education expenses. Paragraph 13 of TR 98/9 states: If a taxpayer's income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction. Thus, self-education expenses incurred by a taxpayer will qualify for deduction under section 8-1 of the ITAA 1997 , if there is a sufficient nexus to the production of assessable income and the improvement of a skill or some specific knowledge. Similarly, if the study of a subject of self-education objectively leads to, or is likely to lead to an increase in a taxpayer's income from his or her current income earning activities in the future, a deduction is allowable. In your case, it is accepted that the MBA course will maintain or enhance the skills that are required in the performance of your current role. Consequently, the self-education expenses incurred have the necessary and relevant connection with the earning of your assessable income. You are therefore entitled to a deduction under section 8-1 of the ITAA 1997 for self-education expenses. | Detailed Reasoning - Deduction for tuition fees: Tuition fees associated with a course of self-education are deductible where the self-education relates to your employment. The fact that the fees are paid to a non-Australian university or have been funded with a loan does not alter their deductibility. The deduction is allowed in the year the fees are charged to your university account. As the MBA relates to your employment, the tuition fees you incur after commencing that role are deductible self-education expenses.

Relevant facts: You arrived in Australia during the relevant financial year from Country Z to commence employment. Your employment involves executive and leadership duties. | Prior to moving to Australia you commenced a Master of Business Administration (MBA) through a non-Australian university whilst you were employed in a similar position to your current role. | The completion of your MBA will significantly increase your standing within the industry. | You are funding your course tuition fees by accessing a government study loan.