Private ruling: self education expenses
Published: September 2011
Ruling period: Year ended 30 June 2010
Date scheme commenced: 1 July 2010

Ruling: Q1: 1. Are you entitled to a deduction for self education expenses? | A2: 

Relevant facts and circumstances: You are an engineer. Your day to day activities involve project and contract management to a high degree. You are studying a Masters in Project Management on a part time basis. You pay your tuition fees through FEE-HELP. You submit that the Masters you are studying will help to enhance your skills and increase the efficiency in which you carry out your current income earning activities. You are paying your FEE-HELP debt off with payments from your salary. The course you are studying is not Commonwealth supported.

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 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 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. 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 Masters will maintain or enhance the skills that are required in the performance of your current employment duties. Consequently the self education expenses incurred have the necessary and relevant connection with the earning of your assessable income and are therefore deductible. | Detailed Reasoning - FEE-HELP: FEE-HELP was introduced by the Commonwealth to provide assistance to students who are not supported by the Commonwealth to pay course fees. When you pay your course fees by FEE-HELP, you are entitled to deduct the expenses when they are originally incurred (subject to the above deductibility tests). However you are not entitled to a deduction for the repayment of the FEE-HELP debt itself (Section 26-20 of the ITAA 1997). As you have met the requirements for eligibility for a deduction for self education expenses, the whole course fee is deductible.

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. | 2. Is the deduction for self education still allowable where some of the course fees are paid using a full-fee paying students Higher Education Loan Programme (FEE-HELP) loan?