Private ruling: Self-education expenses
Date of advice: 11 September 2019
Published: October 2019
Ruling period: Year ending 30 June 2020 | Year ending 30 June 2021
Date scheme commenced: 1 July 2019

Ruling: Q1: Are you entitled to a deduction for the course fees incurred in undertaking an MBA which is conducted overseas? | A1: Yes

Relevant facts and circumstances: You are employed. You have applied for an MBA program with on-site modules held on multiple overseas campuses. The course will take about 18 months. The purpose of undertaking the course is to enhance your competencies required for your current position. You are not receiving Austudy, Abstudy or Youth Allowance for this education You do not intend to apply for HELP loans for this education. You intend to self-fund the cost of this course. You may apply for financing to fund participation in this course. You are applying to your employer for education assistance under the existing company policy. Your employer supports your participation in this course by providing time off work and study leave for the residential portion of the six modules. You do not envisage a change in position while undertaking this study.

Relevant legislative provisions: Income Tax Assessment Act 1936 s ection 82A | Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 Division 900

Reasons for decision: Detailed Reasoning - Self-education expenses: 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 the course of gaining or producing the assessable income, but are not allowable to the extent that they are of a capital, private or domestic nature. Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business discusses the circumstances under which self-education expenses are allowable as a deduction under section 8-1 of the ITAA 1997. Paragraphs 13 and 14 of TR 98/9 states: If a taxpayer's income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction. 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, no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to open up a new income-earning activity, whether in business or in the taxpayer's current employment. Such expenses of self-education are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. | Detailed Reasoning - Application to your circumstances: In your case it is accepted that the study has sufficient nexus to your income earning activities. Therefore the course fees are an allowable deduction under section 8-1 of the ITAA 1997.