Private ruling: Self-education expenses
Date of advice: 6 September 2016
Published: October 2016
Ruling period: Year ending 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Question and answer | Are you entitled to a deduction for self-education expenses? | Yes.

Relevant facts and circumstances: You are currently employed as a professional. You are undertaking post graduate study. Your employer pays $XXX toward each subject (for which you will not claim a deduction). Your course fees are paid under FEE-HELP.

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 Income tax: deductibility of self-education expenses incurred by an employee or a person in business discusses circumstances in which self-education expenses are allowable as a deduction under section 8-1 of the ITAA 1997. If a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and the self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction. In addition, 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, the self-education expenses are allowable as a deduction. However, the decision of the High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541 establishes the principle that no deduction is allowable for self-education expenses if the study is to enable the taxpayer to get employment, obtain new employment or to open up a new income-earning activity (whether in business or the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. If a course of study is too general in terms of the taxpayer's current income-earning activities, the necessary connection between the self-education expenses and the income-earning activity does not exist. In your case you are employed as a professional. You are undertaking post graduate study which will enhance and maintain your current skills. The Commissioner is satisfied that there is sufficient connection between the skills and knowledge required in your current position and the post graduate study. You are entitled to a deduction for self-education expenses. | Detailed Reasoning - FEE-HELP: If you obtain a loan for all or part of the fees for your course under FEE-HELP, this does not preclude you from claiming a deduction for the expenses incurred in relation to the course. You are still entitled to a deduction under section 8-1 of the ITAA 1997 for expenses paid for the course, even though you may obtain a loan for your fees under FEE-HELP. You have a loan under FEE-HELP for the cost of the post graduate study. You are entitled to a deduction for the costs of your course fees less those contributions made by your employer.