Private ruling: self-education expenses
Date of advice: 2 August 2016
Published: September 2016
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you entitled to claim a deduction for your self-education expenses incurred in completing your Masters in Business Administration (MBA) degree? | A1: Yes. | Q2: Are you entitled to a deduction for course fees paid where you have obtained a loan under FEE-HELP? | A2: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Section 26-20

Reasons for decision: Summary: Self-education expenses 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, except where the outgoings are of a capital, private or domestic nature. 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. A deduction is allowable for self-education expenses if a taxpayer's current income earning activities are based on the exercise of a skill or some specific knowledge and the subject of the self-education enables the taxpayer to maintain or improve that skill or knowledge ( Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348). Similarly, 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 his or her current income earning activities in the future, a deduction is allowable. In your case, it is accepted that the MBA course will maintain or enhance the skills and knowledge that are required in the performance of your current employment duties. Consequently the self-education expenses incurred in undertaking the course have the necessary and relevant connection with the earning of your assessable income and are therefore deductible under section 8-1 of the ITAA 1997. Course fees paid under FEE-HELP Section 26-20 of the ITAA 1997 denies deductions for certain HELP and student assistance payments. However this section does not apply to FEE-HELP. In your case, your course fees are paid under the FEE-HELP system. As your course of study is sufficiently connected to your current employment, you are entitled to a deduction under section 8-1 of the ITAA 1997 for expenses paid for your course of study, even though you have obtained a loan under FEE-HELP.

Relevant facts: You are employed as a professional. | Part of your current role is in management. | You are undertaking a MBA to further increase your current skills and knowledge. | You have completed several subjects. | Your course fees are funded by the Commonwealth Government and your MBA degree has FEE-HELP status.