Private ruling: Deduction for self-education expenses
Published: January 2012
Ruling period: Year ended 30 June 2007 | Year ended 30 June 2008 | Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011
Date scheme commenced: 1 July 2006

Ruling: Q1: Are you entitled to a deduction for self-education expenses against the Veterans' Children Education Scheme (VCES) payments for the 2006-07 to 2010-11 financial years? | A1: Yes

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. During the 2006-07 to 2010-11 financial years, you were undertaking full-time study at a university. You were in receipt of VCES payments in each financial year which was declared in your income tax returns. You advised that to be eligible to receive the VCES payments, you were required to undertake a course of education and meet the same requirements as those who receive Austudy benefits. During the 2006-07 to 2010-11 financial years, you were also carrying on a business. The business activities did not have any direct connection with the course of education you were undertaking.

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

Reasons for decision: Summary: 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. However, a deduction is not allowed where the outgoings are of a capital, private or domestic nature. Your private ruling application refers to the High Court decision in Commissioner of Taxation v. Anstis (2010) HCA 40 ( Anstis case ). In the Anstis case , the High Court considered the deductibility of expenses incurred by the taxpayer in undertaking her study which was a requirement to her receiving the Youth Allowance. It was found that the reason for the taxpayer incurring the expenses was not determinative of the question whether they were incurred in gaining or producing the Youth Allowance. The occasion of her study expenses was to be found in what she did to establish and retain her statutory entitlement to the Youth Allowance. Expenses incurred included depreciation in value of a computer, textbooks and stationery, student administration fees, supplies for children during the taxpayer's teaching rounds and travel expenses other than to the university. Expenses incurred for travel between the taxpayer's home and place of study was not considered in the Anstis case . Expenses of this nature are still considered to be of a private nature. For the purposes of your circumstances, it is necessary to consider whether the requirements you had to perform to maintain your entitlement to the VCES payments are 'productive' of that income. In your case, you were a student receiving a VCES payment. The education assistance under the Veterans' Entitlements Act 1986 (VEA 1986) is administered by the VCES which is a legislative instrument made under the VEA 1986. Under Part 2.7.1 of the VCES a tertiary student, whether studying full-time or part-time, may receive benefits under the scheme if the student is undertaking full-time tertiary study of a course that would qualify the student for youth allowance under Part 2.11 of the Social Security Act 1991 (SSA 1991). To be eligible for a payment under the VCES, the student must: § study an approved course under Part 2.11 of the SSA 1991 - this is an approved course for Youth Allowance purposes according to Part 2.1.7 of the VCES § must be enrolled in a course to undertake study - whether currently or for the earliest commencement date of the course according to subsection 569H(1) of the SSA 1991 § complete the course within the allowable study time plus an additional amount of time to complete an outstanding subject or unit (subsection 569H(3) of the SSA 1991). The eligibility requirements under the VCES is governed by the VEA 1986 and the study requirements and maintenance conditions are linked to requirements and definitions contained in the SSA 1991. In light of the Tax Office's acceptance of the High Court's decision in the Anstis case that the self-education expenses were incurred in 'gaining or producing' the Youth Allowance income received, it follows that similar expenses would be an allowable deduction to students in receipt of VCES payments, where the requirements to retain the entitlement were similar to that of Youth Allowance. In your case, as the receipt of VCES income is subject to similar requirements as those in receipt of Youth Allowance income, you are entitled to a deduction for self-education expenses under section 8-1 of the ITAA 1997 for the 2006-07 to 2010-11 financial years.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.