Private ruling: Self-education Expenses
Date of advice: 19 July 2018
Published: September 2018
Ruling period: Year ended 30 June 20xx | Year ended 30 June 20xx | Year ended 30 June 20xx
Date scheme commenced: 1 July 20xx

Ruling: Q1: Is the cost of undertaking an MBA course deductible under Section 8-1 of the Income tax Assessment Act ? | A1: Yes

Relevant facts and circumstances: You are an Australian resident for tax purposes. You are currently employed as a general manager. Your current employer has stated that they believe completing the course will likely enhance your skills in your current position. In addition as the company expands the qualifications would assist in your role within the expanded business. Your current employment description includes a number of responsibilities relating to your MBA’s listed course subjects such as the following: ● To drive and deliver strategic initiatives for commercial sales strategy and meet business objectives. ● Work cross functionality to drive strategy and planning activities and ensure buy-in from key stakeholders and manage initiatives through to execution ● Leadership, communication, coaching and mentoring at senior level, including senior leadership team. Your employer has stated they will assist you with the following: ● One Friday per month available for study ● 4 X 1 week blocks to assist with intensive study ● Travel times required over the 15 months course period You will be enrolled in a Master of Business Administration commencing in in the second part of 20xx and finishing December 20xx.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1936 section 82A

Reasons for decision: Summary: The self-education expenses, including course fees, incurred in undertaking this program have the necessary and relevant connection with the earning of your assessable income and are deductable under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). | Detailed Reasoning - Detailed reasoning: Section 8-1 of the 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 (TR 98/9) provides the Commissioner’s view for the circumstances under which self-education expenses are allowable as a deduction. TR 98/9 provides that 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. | Detailed Reasoning - Application to your circumstances: You will be undertaking a course in Master of Business Administration including subjects in executive leadership, business strategy, Innovation, global marketing and networking for use in carrying on your income earning activities as a general manager. In your case, there is sufficient connection between the courses you will be completing and your income producing activities at the time as stated by your employer. You will undertake the course to enhance your existing capabilities, skills and knowledge that are required in the performance of your current employment as a general manager. Consequently, the self-education expenses, including course fees, incurred in undertaking this course that have the necessary and relevant connection with the earning of your assessable income and are deductable under section 8-1 of the ITAA 1997. | Detailed Reasoning - Additional information: In certain circumstances you may have to reduce your allowable self-education expenses by $250. However you may have other types of expenses some of which are not allowable as a deduction that can be offset against the $250 before you reduce the amount you can claim for allowable expenses.