Private ruling: Self-education expenses
Date of advice: 16 April 2021
Published: June 2021
Ruling period: Year ended 30 June 2019 | Year ended 30 June 2020 | Year ending 30 June 2021
Date scheme commenced: 1 July 2018

Ruling: Q1: Are expenses incurred in studying an executive Master of Business Administration an allowable deduction? | A1: No.

Relevant facts and circumstances: You are a country A citizen. You enrolled in an executive Master of Business Administration (MBA). The MBA program ran for 15 months. You paid an acceptance fee during the year ended 30 June 2019. You paid course fees during the year ended 30 June 2019. You paid course fees during the year ended 30 June 2020. You paid course fees during the year ended 30 June 2021. You moved to Australia from Country A during year ended 30 June 2020. You hold an Australian visa. You are a permanent resident of Australia for immigration purposes. You began employment in Australia during the course. Your employer has provided a letter stating that the MBA is largely considered a significant prerequisite for your role.

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 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 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business discusses the circumstances under which self-education expenses are allowable as a deduction. No deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to get employment or to obtain new employment. Such expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income (High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541). In your case, you gained new employment while participating in the executive Master of Business Administration. Although you may gain knowledge and skills from the course of education that could be of some assistance in your work, the predominant focus of the course was designed to open a new income earning activity. The expenses associated with the course are therefore incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. Therefore, you are not entitled to a deduction under section 8-1 of the ITAA 1997 for self-education expenses relating to the executive Master of Business Administration.