Private ruling: Deductions - self-education expenses
Date of advice: 16 October 2024
Published: 25 November 2024
Ruling period: Year ended DD/MM/20YY
Date scheme commenced: DD/MM/20YY

Ruling: Q1: Are you entitled to a deduction for the tuition fees incurred in studying the Master of Law (LLM) course under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Section 8-1 of the 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 or relate to the earning of exempt income. Taxation Ruling TR 2024/3 Income tax: deductibility of self-education expenses incurred by an individual states that a deduction is allowable for self-education expenses if your income earning activities are based on the exercise of a skill or some specific knowledge, and the self-education enables you to maintain or improve that skill or knowledge. This ruling also indicates that 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 their current income earning activities in the future, then a deduction is allowable. In your case, it is accepted that the Master of Laws at the University will maintain or enhance the skills that are required in the performance of your current employment duties. Accordingly, as your self-education directly relates to your employment as a solicitor, you are entitled to a deduction for the cost of your tuition fees.

Relevant facts and circumstances: On DD/MM/20YY, you commenced full-time employment as a lawyer with Company A. In MM/20YY, you applied for the full-time 9 month Master of Laws course at the University of XXX in Country A. You chose to take this course as it is a globally recognised programme offered by one of the world's leading universities that provides exceptional academic opportunities that are not matched by similar programmes in Australia. On DD/MM/20YY, Company A, provided by email, approval of a leave of absence period commencing DD/MM/20YY and finishing DD/MM/20YY. You were granted the leave of absence from your employment to complete the course, with the expectation that you return to the same position on completion of the studies. During this leave of absence your employment status was retained but no salary was paid, no leave accrued and no superannuation contributions made by Company A. On DD/MM/20YY, you paid the full tuition fees of $XXX. You did not receive an allowance and were not reimbursed for the costs incurred to undertake this study. On DD/MM/20YY, you commenced the course. You undertook the course to gain additional legal knowledge and to enhance your legal analysis, research and writing skills relevant to your employment. On DD/MM/20YY, you completed the course. You initially intended to return to Australia, but accepted an employment opportunity in Country A for professional reasons.

Relevant legislative provisions: Income Tax Assessment 1997 section 8-1