Private ruling: Self-education expenses
Date of advice: 9 June 2022
Published: September 2022
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 May 20XX

Ruling: Q1: Are the expenses you incurred in studying a Master of Business Administration partly deductible? | A1: Yes.

Relevant facts and circumstances: You are a medical practitioner and Clinical Director at a General Practice company. You started the role of medical practitioner and Clinical Director in 20XX. You became a Fellow of the Royal Australian College of General Practitioners in 20XX. Prior to this, you worked as a Senior House Officer overseas and in Australia. Your present position includes the roles and responsibilities of both the medical practitioner and Clinical Director. As a medical practitioner, you attend patient consultations by appointment from 8.30am to 5pm on weekdays. As Clinical Director, you stated you're responsible for general management of the practice including financial/ budget management, training of junior doctors and medical students; and maintaining compliance. You also deal with the Australian Health Practitioner Regulation Agency (AHPRA) complaints, liaison, recruitment, management of medical equipment purchases, Covid clinic registration. You are also responsible for implementation of best clinical practice initiatives as required including future direction of the practice and business. You stated you spend a minimum of 2-3 hours in between patient consultations and from 5-7pm on weekdays for management duties in your role as Clinical Director. You estimate that you spend an approximate percentage of your time in your management duties. You have worked in this capacity since 20XX. You commenced a Master of Business Administration (MBA) at ABC University in May 20XX. You are undertaking the MBA study to improve your skills in your role as Clinical Director in areas of leadership, financial management, data interpretation, marketing, performance management and strategic planning for the practice. You are not completing the course to gain new employment in your industry or elsewhere. Assumption No reimbursement of your MBA expenses has been made to you by your employer.

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

Reasons for decision: Summary: Legislative references are to the Income Tax Assessment Act 1997 unless otherwise specified. Section 8-1 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 explains how section 8-1 applies to self-education expenses. Self-education expenses must have a clear and relevant connection to your current income earning activities to be deductible. To show this connection it must be demonstrated that: • The self-education helps you maintain and increase the knowledge and skills you use in your income earning activities; or • The self-education is likely to lead to an increase in income from your current income earning activities. However, the self-education expenses will not be deductible if the study is to enable you to open up a new profession or occupation and get a new employment. TR 98/9 provides (at paragraph 23) the types of self-education expenses which are allowable subject to the general tests in section 8-1. The ruling also provides (at paragraph 24) the types of self-education expenses which are not allowable. | Detailed Reasoning - Timing of deduction: Allowable self-education expenses are deductible in the financial year in which they are incurred. | Detailed Reasoning - Application to your circumstances: In your circumstance, you are working in a dual capacity in your role as Clinical Director and Principal Doctor. It is considered that your MBA study will help you maintain and improve your skills in the conduct of your duties as Clinical Director. However, the MBA study is not considered to have a significant nexus to help you maintain and improve your skills in the conduct of your duties as a medical practitioner. Therefore, a reasonable apportionment of the deduction is required. The expenses in your MBA study are deductible only to the extent that they are incurred in relation to your income earning activities as Clinical Director. You have stated that you would spend an approximate percentage of your time in your Clinical Director role, so you are entitled to a partial deduction of up to the approximate percentage of the allowable expenses. Refer to paragraph 23 of TR 98/9 for details of the types of self education expenses which are allowable to deduct; refer to paragraph 24 of the ruling for details of the types of expenses which are not allowable.