Private ruling: Work related expenses - self education
Date of advice: 28 November 2024
Published: 20 January 2025
Ruling period: Year Ended 30 June 2024
Date scheme commenced: 1 July 2023

Ruling: Q1: Are you entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 for your self-education expenses for your Master in Business Administration (MBA)? | A1: Yes.

Relevant facts and circumstances: Your employment contract with your current employer began as a technical consultant completing long term projects for domestic and foreign clients. You have completed a Masters of Business Administration (MBA) while employed by your current employer. As your employer is a small company your work extends beyond primary technical work in your specialised field, and you conduct extensive work in the business strategy and development space providing advice to your company's board of directors and external clients on business practice, economic strategy, environmental, social, and governance strategy and compliance, and agile management. You also manage overseas employees and ensure quality assurance requirements are met for the business. You provided a letter from your employer advising they are supportive of your completion of your self-funded MBA units which applies to your present/current role. They advised your role is a hybrid and your studies support improving your performance in your current role and provide additional relevant skills. You provided invoices showing the invoice dates confirming you started the MBA while employed with your current employer. The course is self-funded, and you have not accessed any Higher Education Loan Program.

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. Self-education expenses are deductible under section 8-1 of the ITAA 1997 where they have a relevant connection to the taxpayer's current income earning activities. Taxation Ruling 2024/3 Income tax: deductibility of self-education expenses incurred by an individual (TR 2024/3) discusses circumstances in which self-education expenses are allowable. 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 self-education enables the taxpayer to maintain or improve that skill or knowledge. To be able to claim a deduction, the expenses must relate to your income earning activities at the time of incurring the expense. In your situation, at the time you enrolled in the MBA course you were employed by your current employer. It is accepted that the MBA course of study would enhance your existing skills and knowledge as required in that position. Accordingly, you are entitled to a deduction under section 8-1 of the ITAA 1997 for expenses paid for the course of study as it is directly related to your income earning activities.