Private ruling: Work related self-education expenses
Date of advice: 11 May 2020
Published: June 2020
Ruling period: Year Ending 30 June 20XX | Year Ending 30 June 20XX | Year Ending 30 June 20XX | Year Ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a self-education deduction for the course fees? | A1: No | Q2: Are you entitled to a self-education deduction for books in the year they were purchased? | A2: Yes

Relevant facts and circumstances: You are employed. You commenced a course in the 20XX income year. You completed this course in the 20XX income year. You are not receiving Austudy, ABSTUDY or Youth Allowance to study. You are not receiving a taxable bonded scholarship. You are not being reimbursed by anyone for expenses incurred in relation to your study. You are not being reimbursed for the cost of textbooks. The course will further develop your skills and knowledge of your current employment. In addition, the subjects you will undertake in the course will expand your knowledge in areas relevant to your employment position. The course will develop your confidence as an employee and lead to a promotion. You had a HELP Loan, which was paid in full as at 20XX income year.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 subsection 26-20(1)

Reasons for decision: Summary: Yes, you can claim some of the self-education expenses, but only the textbook fees, not the course fees. The textbook fees can be claimed in the income years they were purchased. | Detailed Reasoning - Detailed reasoning: In general terms, self-education expenses incurred in attending educational institutions are deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) where the expenses have the necessary connection in gaining or producing the taxpayer's assessable income. For a deduction of self-education expenses to be allowable you also need to meet the following governing principles contained in Taxation Ruling 98/9 - Income tax: deductibility of self-education expenses incurred by an employee or a person in business (TR 98/9) a) The 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. b) The study of a subject of self-education objectively leads to, or is likely to lead to, an increase in the taxpayer's income from his or her current income-earning activities in the future. | Detailed Reasoning - Types of self-education expenses allowable: Under TR 98/9, subject to the general tests under section 8-1 being met, the following types of expenses related to self-education are allowable: a) course or tuition fees of attending an educational institution, work-related conference or seminar, including student union fees; b) the cost of professional and trade journals, textbooks and stationery; c) airfares incurred on overseas study tours or sabbatical, on work-related conferences or seminars, or attending an educational institution. They are part of the necessary cost of participating in the tour, etc.; d) subject to paragraph 24(c) of this Ruling, where a taxpayer is away from home overnight, accommodation and meals expenses incurred on overseas study tours, on work-related conferences or seminars, or attending an educational institution; and e) interest incurred on borrowed monies where the funds are used to pay for self-education expenses associated with a course of education, that enables a taxpayer to maintain or improve his or her skill or knowledge or is likely to lead to an increase in income from the taxpayer's current income-earning activities. Regard must be had to the connection between the interest expense and the income-earning activity in each income year interest is claimed because a change in circumstances, for example, a change of employment, may mean that the necessary connection no longer exists. | Detailed Reasoning - Types of self-education expenses not allowable: The following expenses related to self-education are not allowable under section 8-1: a) a student contribution amount or debt repayment amount specified in section 26-20 of the ITAA 1997; b) expenditure on meals while attending an educational institution, work-related conference or seminar where the taxpayer is not required to sleep away from home; c) expenditure on accommodation and meals where a taxpayer who has travelled to another location for self-education purposes has established a new home. In your situation, you meet the general tests under section 8-1 for the textbook expenses you have incurred to be deductible. However the main issue to answer here is whether you are entitled to claim your course fees having taken out a HELP loan and repaid it in full. TR 98/9 paragraph 85 states the following when determining if a student contribution amount paid to a higher education provider is deductible: "Course or tuition fees incurred in attending an educational institution or attending work-related conferences or seminars, including student union fees, are allowable under section 8-1. However, you cannot deduct a student contribution amount paid to a higher education provider under the Higher Education Support Act 2003: paragraph 26-20(1)(ca) of the ITAA 1997. Such payments are made by a student to cover the cost of a course of study at a tertiary educational institution. Repayment amounts for a Higher Education Loan Program (HELP) debt or a Student Financial Supplement Scheme (SFSS) debt are also not deductible'' Subsection 26-20(1) ITAA 1997 lists the types of commonwealth assistance student loans that cannot be deducted under the act: These are set out below: a) a student contribution amount within the meaning of the Higher Education Support Act 2003 paid to a higher education provider (within the meaning of that Act); or b) a payment made to reduce a debt to the Commonwealth under Chapter 4 of that Act; or c) a payment made to reduce a debt to the Commonwealth under Part 3A of the VET Student Loans Act 2016 ; or d) a payment made to reduce a debt to the Commonwealth under Chapter 2AA of the Social Security Act 1991 or Part 2 of the Student Assistance Act 1973 ; or e) a payment made to reduce a debt to the Commonwealth under Chapter 3 of the Trade Support Loans Act 2014 ; or f) a payment made to reduce a liability to overseas debtors repayment levy under the Student Loans (Overseas Debtors Repayment Levy) Act 2015 ; or g) a payment made to reduce a debt to the Commonwealth, or to a participating corporation, under Chapter 2B of the Social Security Act 1991 or Part 4A of the Student Assistance Act 1973 . | Detailed Reasoning - Application to your circumstances: In your situation we are satisfied that you have a genuine desire and need to maintain or improve your skills and knowledge as a marketing manager. The course undertaken and the units of study completed are also likely to lead to an increase in income from your income producing activities in the future. When taking into consideration the fact that you paid for the course fees through a HELP loan, this makes all the difference to determining deductibility. The law clearly states under subsection 26-20(1) and specifically paragraph 26-20(1)(cb), that you cannot deduct a payment made to reduce a debt to the Commonwealth under Chapter 4 of that Act. As this includes a HELP loan, you are therefore not entitled to claim any of your course fees as a self-education expense. In regards to the textbook fees, they are an allowable deduction in the year of purchase.