Private ruling: training expenses
Published: November 2011
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Is the partnership entitled to a deduction for university fees and associated costs incurred for a partner to undertake an accounting degree? | A1: Yes.

Relevant facts and circumstances: The partnership is a run by two individuals. One partner performs the work and the other completes the accounts, cash flows, budgets, purchasing, invoices, BAS returns and office work. This partner is currently undertaking an accounting degree at university. The university fees are paid under the FEE-HELP system. Associated costs such as textbooks have been incurred by the partnership. Currently the partnership pays a tax agent to prepare financial statements and tax returns. When the partner completes the university degree, these costs will no longer be incurred by the partnership.

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, or necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income. However, a deduction is not allowed where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. In the partnership's case, one partner is responsible for the accounts, cash flows, budgets, purchasing, invoices, BAS returns and office work. The partner is undertaking a bachelor of accounting degree at the expense of the partnership. It is accepted that the course will maintain and enhance the skills that are required in the performance of the partner's current role within the partnership. There is a sufficient connection between the income earning activities of the partnership and the course undertaken. Therefore, the partnership is entitled to claim a deduction for the course fees and related expenditure under section 8-1 of the ITAA 1997. | Detailed Reasoning - Additional information: Although a loan has been taken for the course fees under FEE-HELP, this does not preclude the partnership from claiming a deduction for the expenses incurred in relation to this course. However, it should be noted that a deduction is not allowed for the repayment of FEE-HELP debt.

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